Correlation Between Neogen Chemicals and Mahamaya Steel

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

By analyzing existing cross correlation between Neogen Chemicals Limited and Mahamaya Steel Industries, you can compare the effects of market volatilities on Neogen Chemicals and Mahamaya Steel 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 Neogen Chemicals with a short position of Mahamaya Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen Chemicals and Mahamaya Steel.

Diversification Opportunities for Neogen Chemicals and Mahamaya Steel

-0.73

Correlation Coefficient

Neogen Chemicals  Mahamaya Steel

Pay attention - limited upside

The 3 months correlation between Neogen and Mahamaya is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Neogen Chemicals Limited and Mahamaya Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahamaya Steel Industries and Neogen Chemicals 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 Neogen Chemicals Limited are associated (or correlated) with Mahamaya Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahamaya Steel Industries has no effect on the direction of Neogen Chemicals i.e., Neogen Chemicals and Mahamaya Steel go up and down completely randomly.

Pair Corralation between Neogen Chemicals and Mahamaya Steel

Assuming the 90 days trading horizon Neogen Chemicals Limited is expected to under-perform the Mahamaya Steel. In addition to that, Neogen Chemicals is 1.79 times more volatile than Mahamaya Steel Industries. It trades about -0.06 of its total potential returns per unit of risk. Mahamaya Steel Industries is currently generating about 0.22 per unit of volatility. If you would invest  19,257  in Mahamaya Steel Industries on December 27, 2024 and sell it today you would earn a total of  6,813  from holding Mahamaya Steel Industries or generate 35.38% return on investment over 90 days.

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

Neogen Chemicals Limited  vs.  Mahamaya Steel Industries

Neogen Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mahamaya Steel Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mahamaya Steel Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Mahamaya Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neogen Chemicals and Mahamaya Steel

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

The idea behind Neogen Chemicals Limited and Mahamaya Steel Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.