Correlation Between MIC Electronics and Venus Pipes

Can any of the company-specific risk be diversified away by investing in both MIC Electronics and Venus Pipes 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 MIC Electronics and Venus Pipes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MIC Electronics Limited and Venus Pipes Tubes, you can compare the effects of market volatilities on MIC Electronics and Venus Pipes 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 MIC Electronics with a short position of Venus Pipes. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIC Electronics and Venus Pipes.

Diversification Opportunities for MIC Electronics and Venus Pipes

0.4

Correlation Coefficient

MIC Electronics  Venus Pipes

Very weak diversification

The 3 months correlation between MIC and Venus is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MIC Electronics Limited and Venus Pipes Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Pipes Tubes and MIC Electronics 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 MIC Electronics Limited are associated (or correlated) with Venus Pipes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Pipes Tubes has no effect on the direction of MIC Electronics i.e., MIC Electronics and Venus Pipes go up and down completely randomly.

Pair Corralation between MIC Electronics and Venus Pipes

Assuming the 90 days trading horizon MIC Electronics Limited is expected to under-perform the Venus Pipes. In addition to that, MIC Electronics is 1.23 times more volatile than Venus Pipes Tubes. It trades about -0.27 of its total potential returns per unit of risk. Venus Pipes Tubes is currently generating about -0.12 per unit of volatility. If you would invest  162,005  in Venus Pipes Tubes on October 9, 2024 and sell it today you would lose (6,765) from holding Venus Pipes Tubes or give up 4.18% of portfolio value over 90 days.

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

MIC Electronics Limited  vs.  Venus Pipes Tubes

MIC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Venus Pipes Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Venus Pipes Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with MIC Electronics and Venus Pipes

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

The idea behind MIC Electronics Limited and Venus Pipes Tubes 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 CEOs Directory module to screen CEOs from public companies around the world.