Correlation Between Naga Dhunseri and Credo Brands

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

By analyzing existing cross correlation between Naga Dhunseri Group and Credo Brands Marketing, you can compare the effects of market volatilities on Naga Dhunseri and Credo Brands 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 Naga Dhunseri with a short position of Credo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naga Dhunseri and Credo Brands.

Diversification Opportunities for Naga Dhunseri and Credo Brands

0.07

Correlation Coefficient

Naga Dhunseri  Credo Brands

Significant diversification

The 3 months correlation between Naga and Credo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Naga Dhunseri Group and Credo Brands Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Brands Marketing and Naga Dhunseri 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 Naga Dhunseri Group are associated (or correlated) with Credo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Brands Marketing has no effect on the direction of Naga Dhunseri i.e., Naga Dhunseri and Credo Brands go up and down completely randomly.

Pair Corralation between Naga Dhunseri and Credo Brands

Assuming the 90 days trading horizon Naga Dhunseri Group is expected to generate 1.08 times more return on investment than Credo Brands. However, Naga Dhunseri is 1.08 times more volatile than Credo Brands Marketing. It trades about 0.11 of its potential returns per unit of risk. Credo Brands Marketing is currently generating about -0.06 per unit of risk. If you would invest  194,412  in Naga Dhunseri Group on October 8, 2024 and sell it today you would earn a total of  242,988  from holding Naga Dhunseri Group or generate 124.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.39%
Values	Daily Returns

Naga Dhunseri Group  vs.  Credo Brands Marketing

Naga Dhunseri Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naga Dhunseri Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Naga Dhunseri is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Credo Brands Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credo Brands Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Credo Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Naga Dhunseri and Credo Brands

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

The idea behind Naga Dhunseri Group and Credo Brands Marketing 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.