Correlation Between Mari Petroleum and Apna Microfinance

Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Apna Microfinance 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 Mari Petroleum and Apna Microfinance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mari Petroleum and Apna Microfinance Bank, you can compare the effects of market volatilities on Mari Petroleum and Apna Microfinance 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 Mari Petroleum with a short position of Apna Microfinance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Apna Microfinance.

Diversification Opportunities for Mari Petroleum and Apna Microfinance

-0.28

Correlation Coefficient

Mari Petroleum  Apna Microfinance

Very good diversification

The 3 months correlation between Mari and Apna is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Apna Microfinance Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apna Microfinance Bank and Mari Petroleum 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 Mari Petroleum are associated (or correlated) with Apna Microfinance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apna Microfinance Bank has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Apna Microfinance go up and down completely randomly.

Pair Corralation between Mari Petroleum and Apna Microfinance

Assuming the 90 days trading horizon Mari Petroleum is expected to generate 8.88 times less return on investment than Apna Microfinance. But when comparing it to its historical volatility, Mari Petroleum is 1.14 times less risky than Apna Microfinance. It trades about 0.01 of its potential returns per unit of risk. Apna Microfinance Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,001  in Apna Microfinance Bank on December 27, 2024 and sell it today you would earn a total of  116.00  from holding Apna Microfinance Bank or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

Mari Petroleum  vs.  Apna Microfinance Bank

Mari Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mari Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mari Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apna Microfinance Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apna Microfinance Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apna Microfinance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mari Petroleum and Apna Microfinance

The main advantage of trading using opposite Mari Petroleum and Apna Microfinance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Apna Microfinance 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 Apna Microfinance will offset losses from the drop in Apna Microfinance's long position.

The idea behind Mari Petroleum and Apna Microfinance Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.