Correlation Between Metalyst Forgings and Bajaj Holdings

Can any of the company-specific risk be diversified away by investing in both Metalyst Forgings and Bajaj Holdings 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 Metalyst Forgings and Bajaj Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metalyst Forgings Limited and Bajaj Holdings Investment, you can compare the effects of market volatilities on Metalyst Forgings and Bajaj Holdings 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 Metalyst Forgings with a short position of Bajaj Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalyst Forgings and Bajaj Holdings.

Diversification Opportunities for Metalyst Forgings and Bajaj Holdings

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Correlation Coefficient

Metalyst Forgings  Bajaj Holdings

Pay attention - limited upside

The 3 months correlation between Metalyst and Bajaj is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metalyst Forgings Limited and Bajaj Holdings Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Holdings Investment and Metalyst Forgings 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 Metalyst Forgings Limited are associated (or correlated) with Bajaj Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Holdings Investment has no effect on the direction of Metalyst Forgings i.e., Metalyst Forgings and Bajaj Holdings go up and down completely randomly.

Pair Corralation between Metalyst Forgings and Bajaj Holdings

If you would invest  868,270  in Bajaj Holdings Investment on September 29, 2024 and sell it today you would earn a total of  261,820  from holding Bajaj Holdings Investment or generate 30.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Metalyst Forgings Limited  vs.  Bajaj Holdings Investment

Metalyst Forgings

Risk-Adjusted Performance

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Very Weak

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

Bajaj Holdings Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Holdings Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Bajaj Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Metalyst Forgings and Bajaj Holdings

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

The idea behind Metalyst Forgings Limited and Bajaj Holdings Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.