Correlation Between Mangalam Drugs and Trent

Can any of the company-specific risk be diversified away by investing in both Mangalam Drugs and Trent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mangalam Drugs and Trent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mangalam Drugs And and Trent Limited, you can compare the effects of market volatilities on Mangalam Drugs and Trent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mangalam Drugs with a short position of Trent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mangalam Drugs and Trent.

Diversification Opportunities for Mangalam Drugs and Trent

0.54

Correlation Coefficient

Mangalam Drugs  Trent

Very weak diversification

The 3 months correlation between Mangalam and Trent is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mangalam Drugs And and Trent Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trent Limited and Mangalam Drugs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mangalam Drugs And are associated (or correlated) with Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trent Limited has no effect on the direction of Mangalam Drugs i.e., Mangalam Drugs and Trent go up and down completely randomly.

Pair Corralation between Mangalam Drugs and Trent

Assuming the 90 days trading horizon Mangalam Drugs And is expected to under-perform the Trent. In addition to that, Mangalam Drugs is 1.24 times more volatile than Trent Limited. It trades about -0.09 of its total potential returns per unit of risk. Trent Limited is currently generating about -0.03 per unit of volatility. If you would invest  740,345  in Trent Limited on September 17, 2024 and sell it today you would lose (40,320) from holding Trent Limited or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mangalam Drugs And  vs.  Trent Limited

Mangalam Drugs And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Drugs And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trent Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trent Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Trent is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mangalam Drugs and Trent

The main advantage of trading using opposite Mangalam Drugs and Trent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mangalam Drugs position performs unexpectedly, Trent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trent will offset losses from the drop in Trent's long position.

The idea behind Mangalam Drugs And and Trent Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .