Correlation Between Motilal Oswal and Teamlease Services

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

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

Diversification Opportunities for Motilal Oswal and Teamlease Services

-0.61

Correlation Coefficient

Motilal Oswal  Teamlease Services

Excellent diversification

The 3 months correlation between Motilal and Teamlease is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Motilal Oswal Financial and Teamlease Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teamlease Services and Motilal Oswal 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 Motilal Oswal Financial are associated (or correlated) with Teamlease Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teamlease Services has no effect on the direction of Motilal Oswal i.e., Motilal Oswal and Teamlease Services go up and down completely randomly.

Pair Corralation between Motilal Oswal and Teamlease Services

Assuming the 90 days trading horizon Motilal Oswal Financial is expected to generate 1.99 times more return on investment than Teamlease Services. However, Motilal Oswal is 1.99 times more volatile than Teamlease Services Limited. It trades about 0.16 of its potential returns per unit of risk. Teamlease Services Limited is currently generating about -0.04 per unit of risk. If you would invest  71,500  in Motilal Oswal Financial on October 2, 2024 and sell it today you would earn a total of  25,085  from holding Motilal Oswal Financial or generate 35.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Motilal Oswal Financial  vs.  Teamlease Services Limited

Motilal Oswal Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Teamlease Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teamlease Services Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Teamlease Services is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Motilal Oswal and Teamlease Services

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

The idea behind Motilal Oswal Financial and Teamlease Services Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.