Correlation Between MAS Financial and Pondy Oxides

Can any of the company-specific risk be diversified away by investing in both MAS Financial and Pondy Oxides 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 MAS Financial and Pondy Oxides into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MAS Financial Services and Pondy Oxides Chemicals, you can compare the effects of market volatilities on MAS Financial and Pondy Oxides 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 MAS Financial with a short position of Pondy Oxides. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAS Financial and Pondy Oxides.

Diversification Opportunities for MAS Financial and Pondy Oxides

0.52

Correlation Coefficient

MAS Financial  Pondy Oxides

Very weak diversification

The 3 months correlation between MAS and Pondy is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MAS Financial Services and Pondy Oxides Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pondy Oxides Chemicals and MAS Financial 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 MAS Financial Services are associated (or correlated) with Pondy Oxides. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pondy Oxides Chemicals has no effect on the direction of MAS Financial i.e., MAS Financial and Pondy Oxides go up and down completely randomly.

Pair Corralation between MAS Financial and Pondy Oxides

Assuming the 90 days trading horizon MAS Financial Services is expected to generate 0.55 times more return on investment than Pondy Oxides. However, MAS Financial Services is 1.83 times less risky than Pondy Oxides. It trades about -0.05 of its potential returns per unit of risk. Pondy Oxides Chemicals is currently generating about -0.1 per unit of risk. If you would invest  26,714  in MAS Financial Services on December 30, 2024 and sell it today you would lose (2,108) from holding MAS Financial Services or give up 7.89% of portfolio value over 90 days.

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

MAS Financial Services  vs.  Pondy Oxides Chemicals

MAS Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAS Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pondy Oxides Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pondy Oxides Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MAS Financial and Pondy Oxides

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

The idea behind MAS Financial Services and Pondy Oxides Chemicals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.