Correlation Between Nahar Industrial and Dhunseri Investments

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

By analyzing existing cross correlation between Nahar Industrial Enterprises and Dhunseri Investments Limited, you can compare the effects of market volatilities on Nahar Industrial and Dhunseri Investments 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 Nahar Industrial with a short position of Dhunseri Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nahar Industrial and Dhunseri Investments.

Diversification Opportunities for Nahar Industrial and Dhunseri Investments

-0.33

Correlation Coefficient

Nahar Industrial  Dhunseri Investments

Very good diversification

The 3 months correlation between Nahar and Dhunseri is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises and Dhunseri Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhunseri Investments and Nahar Industrial 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 Nahar Industrial Enterprises are associated (or correlated) with Dhunseri Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhunseri Investments has no effect on the direction of Nahar Industrial i.e., Nahar Industrial and Dhunseri Investments go up and down completely randomly.

Pair Corralation between Nahar Industrial and Dhunseri Investments

Assuming the 90 days trading horizon Nahar Industrial Enterprises is expected to under-perform the Dhunseri Investments. But the stock apears to be less risky and, when comparing its historical volatility, Nahar Industrial Enterprises is 2.48 times less risky than Dhunseri Investments. The stock trades about -0.05 of its potential returns per unit of risk. The Dhunseri Investments Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  181,215  in Dhunseri Investments Limited on September 4, 2024 and sell it today you would earn a total of  43,980  from holding Dhunseri Investments Limited or generate 24.27% return on investment over 90 days.

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

Nahar Industrial Enterprises  vs.  Dhunseri Investments Limited

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nahar Industrial Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dhunseri Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dhunseri Investments Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Dhunseri Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nahar Industrial and Dhunseri Investments

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

The idea behind Nahar Industrial Enterprises and Dhunseri Investments 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.