Correlation Between Nahar Industrial and Hindustan Copper

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

Diversification Opportunities for Nahar Industrial and Hindustan Copper

0.79

Correlation Coefficient

Nahar Industrial  Hindustan Copper

Poor diversification

The 3 months correlation between Nahar and Hindustan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper 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 Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Nahar Industrial i.e., Nahar Industrial and Hindustan Copper go up and down completely randomly.

Pair Corralation between Nahar Industrial and Hindustan Copper

Assuming the 90 days trading horizon Nahar Industrial Enterprises is expected to under-perform the Hindustan Copper. But the stock apears to be less risky and, when comparing its historical volatility, Nahar Industrial Enterprises is 1.05 times less risky than Hindustan Copper. The stock trades about -0.25 of its potential returns per unit of risk. The Hindustan Copper Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  24,715  in Hindustan Copper Limited on December 29, 2024 and sell it today you would lose (2,636) from holding Hindustan Copper Limited or give up 10.67% of portfolio value over 90 days.

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

Nahar Industrial Enterprises  vs.  Hindustan Copper Limited

Nahar Industrial Ent

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hindustan Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Nahar Industrial and Hindustan Copper

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

The idea behind Nahar Industrial Enterprises and Hindustan Copper 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.