Correlation Between Metalyst Forgings and Chambal Fertilizers

Can any of the company-specific risk be diversified away by investing in both Metalyst Forgings and Chambal Fertilizers 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 Chambal Fertilizers 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 Chambal Fertilizers Chemicals, you can compare the effects of market volatilities on Metalyst Forgings and Chambal Fertilizers 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 Chambal Fertilizers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalyst Forgings and Chambal Fertilizers.

Diversification Opportunities for Metalyst Forgings and Chambal Fertilizers

0.0

Correlation Coefficient

Metalyst Forgings  Chambal Fertilizers

Pay attention - limited upside

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

Pair Corralation between Metalyst Forgings and Chambal Fertilizers

Assuming the 90 days trading horizon Metalyst Forgings is expected to generate 3.63 times less return on investment than Chambal Fertilizers. In addition to that, Metalyst Forgings is 1.02 times more volatile than Chambal Fertilizers Chemicals. It trades about 0.02 of its total potential returns per unit of risk. Chambal Fertilizers Chemicals is currently generating about 0.06 per unit of volatility. If you would invest  28,367  in Chambal Fertilizers Chemicals on October 5, 2024 and sell it today you would earn a total of  22,263  from holding Chambal Fertilizers Chemicals or generate 78.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Metalyst Forgings Limited  vs.  Chambal Fertilizers Chemicals

Metalyst Forgings

Risk-Adjusted Performance

0 of 100

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 latest stock price disarray, may contribute to short-term losses for the investors.

Chambal Fertilizers

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chambal Fertilizers Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Chambal Fertilizers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Metalyst Forgings and Chambal Fertilizers

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

The idea behind Metalyst Forgings Limited and Chambal Fertilizers 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.