Correlation Between Muthoot Finance and Hindustan Media

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

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

Diversification Opportunities for Muthoot Finance and Hindustan Media

0.67

Correlation Coefficient

Muthoot Finance  Hindustan Media

Poor diversification

The 3 months correlation between Muthoot and Hindustan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Muthoot Finance Limited and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures and Muthoot Finance 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 Muthoot Finance Limited are associated (or correlated) with Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of Muthoot Finance i.e., Muthoot Finance and Hindustan Media go up and down completely randomly.

Pair Corralation between Muthoot Finance and Hindustan Media

Assuming the 90 days trading horizon Muthoot Finance Limited is expected to generate 0.77 times more return on investment than Hindustan Media. However, Muthoot Finance Limited is 1.29 times less risky than Hindustan Media. It trades about 0.1 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about 0.01 per unit of risk. If you would invest  196,405  in Muthoot Finance Limited on October 2, 2024 and sell it today you would earn a total of  17,210  from holding Muthoot Finance Limited or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Muthoot Finance Limited  vs.  Hindustan Media Ventures

Muthoot Finance

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Muthoot Finance Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Muthoot Finance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hindustan Media Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Media Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hindustan Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Muthoot Finance and Hindustan Media

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

The idea behind Muthoot Finance Limited and Hindustan Media Ventures 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 Stocks Directory module to find actively traded stocks across global markets.