Correlation Between Mindteck and Welspun Investments

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

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

Diversification Opportunities for Mindteck and Welspun Investments

0.27

Correlation Coefficient

Mindteck  Welspun Investments

Modest diversification

The 3 months correlation between Mindteck and Welspun is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mindteck Limited and Welspun Investments and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welspun Investments and and Mindteck 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 Mindteck Limited are associated (or correlated) with Welspun Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welspun Investments and has no effect on the direction of Mindteck i.e., Mindteck and Welspun Investments go up and down completely randomly.

Pair Corralation between Mindteck and Welspun Investments

Assuming the 90 days trading horizon Mindteck Limited is expected to under-perform the Welspun Investments. But the stock apears to be less risky and, when comparing its historical volatility, Mindteck Limited is 1.75 times less risky than Welspun Investments. The stock trades about -0.3 of its potential returns per unit of risk. The Welspun Investments and is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  90,185  in Welspun Investments and on October 23, 2024 and sell it today you would lose (11,380) from holding Welspun Investments and or give up 12.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Mindteck Limited  vs.  Welspun Investments and

Mindteck Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mindteck Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Mindteck may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Welspun Investments and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welspun Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mindteck and Welspun Investments

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

The idea behind Mindteck Limited and Welspun Investments and 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.