Correlation Between Motilal Oswal and Zodiac Clothing

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

Diversification Opportunities for Motilal Oswal and Zodiac Clothing

-0.65

Correlation Coefficient

Motilal Oswal  Zodiac Clothing

Excellent diversification

The 3 months correlation between Motilal and Zodiac is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Motilal Oswal Financial and Zodiac Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Clothing 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 Zodiac Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Clothing has no effect on the direction of Motilal Oswal i.e., Motilal Oswal and Zodiac Clothing go up and down completely randomly.

Pair Corralation between Motilal Oswal and Zodiac Clothing

Assuming the 90 days trading horizon Motilal Oswal Financial is expected to generate 1.95 times more return on investment than Zodiac Clothing. However, Motilal Oswal is 1.95 times more volatile than Zodiac Clothing. It trades about 0.12 of its potential returns per unit of risk. Zodiac Clothing is currently generating about -0.06 per unit of risk. If you would invest  75,890  in Motilal Oswal Financial on September 3, 2024 and sell it today you would earn a total of  18,720  from holding Motilal Oswal Financial or generate 24.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Motilal Oswal Financial  vs.  Zodiac Clothing

Motilal Oswal Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 9 (%) 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.

Zodiac Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zodiac Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Motilal Oswal and Zodiac Clothing

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

The idea behind Motilal Oswal Financial and Zodiac Clothing 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.