Correlation Between MRF and Pritish Nandy

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

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

Diversification Opportunities for MRF and Pritish Nandy

0.16

Correlation Coefficient

MRF  Pritish Nandy

Average diversification

The 3 months correlation between MRF and Pritish is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and Pritish Nandy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pritish Nandy Commun and MRF 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 MRF Limited are associated (or correlated) with Pritish Nandy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pritish Nandy Commun has no effect on the direction of MRF i.e., MRF and Pritish Nandy go up and down completely randomly.

Pair Corralation between MRF and Pritish Nandy

Assuming the 90 days trading horizon MRF Limited is expected to generate 0.71 times more return on investment than Pritish Nandy. However, MRF Limited is 1.41 times less risky than Pritish Nandy. It trades about 0.09 of its potential returns per unit of risk. Pritish Nandy Communications is currently generating about -0.34 per unit of risk. If you would invest  12,684,100  in MRF Limited on October 5, 2024 and sell it today you would earn a total of  237,100  from holding MRF Limited or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

MRF Limited  vs.  Pritish Nandy Communications

MRF Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRF Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MRF is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pritish Nandy Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pritish Nandy Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pritish Nandy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MRF and Pritish Nandy

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

The idea behind MRF Limited and Pritish Nandy Communications 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.