Correlation Between Matrix and Plasson Indus

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

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

Diversification Opportunities for Matrix and Plasson Indus

0.83

Correlation Coefficient

Matrix  Plasson Indus

Very poor diversification

The 3 months correlation between Matrix and Plasson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Plasson Indus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plasson Indus and Matrix 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 Matrix are associated (or correlated) with Plasson Indus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plasson Indus has no effect on the direction of Matrix i.e., Matrix and Plasson Indus go up and down completely randomly.

Pair Corralation between Matrix and Plasson Indus

Assuming the 90 days trading horizon Matrix is expected to generate 1.28 times less return on investment than Plasson Indus. But when comparing it to its historical volatility, Matrix is 1.32 times less risky than Plasson Indus. It trades about 0.2 of its potential returns per unit of risk. Plasson Indus is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,412,812  in Plasson Indus on September 2, 2024 and sell it today you would earn a total of  287,188  from holding Plasson Indus or generate 20.33% return on investment over 90 days.

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

Matrix  vs.  Plasson Indus

Matrix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix sustained solid returns over the last few months and may actually be approaching a breakup point.

Plasson Indus

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plasson Indus are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plasson Indus sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix and Plasson Indus

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

The idea behind Matrix and Plasson Indus 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 Global Correlations module to find global opportunities by holding instruments from different markets.