Correlation Between NIFTY SUMER and PTC INDUSTRIES

Can any of the company-specific risk be diversified away by investing in both NIFTY SUMER and PTC INDUSTRIES 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 NIFTY SUMER and PTC INDUSTRIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NIFTY SUMER DURABLES and PTC INDUSTRIES LTD, you can compare the effects of market volatilities on NIFTY SUMER and PTC INDUSTRIES 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 NIFTY SUMER with a short position of PTC INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIFTY SUMER and PTC INDUSTRIES.

Diversification Opportunities for NIFTY SUMER and PTC INDUSTRIES

0.75

Correlation Coefficient

NIFTY SUMER  PTC INDUSTRIES

Poor diversification

The 3 months correlation between NIFTY and PTC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NIFTY SUMER DURABLES and PTC INDUSTRIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC INDUSTRIES LTD and NIFTY SUMER 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 NIFTY SUMER DURABLES are associated (or correlated) with PTC INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC INDUSTRIES LTD has no effect on the direction of NIFTY SUMER i.e., NIFTY SUMER and PTC INDUSTRIES go up and down completely randomly.

Pair Corralation between NIFTY SUMER and PTC INDUSTRIES

Assuming the 90 days trading horizon NIFTY SUMER DURABLES is expected to generate 0.52 times more return on investment than PTC INDUSTRIES. However, NIFTY SUMER DURABLES is 1.91 times less risky than PTC INDUSTRIES. It trades about 0.64 of its potential returns per unit of risk. PTC INDUSTRIES LTD is currently generating about 0.11 per unit of risk. If you would invest  3,877,930  in NIFTY SUMER DURABLES on September 16, 2024 and sell it today you would earn a total of  412,405  from holding NIFTY SUMER DURABLES or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

NIFTY SUMER DURABLES  vs.  PTC INDUSTRIES LTD

Pair Trading with NIFTY SUMER and PTC INDUSTRIES

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

The idea behind NIFTY SUMER DURABLES and PTC INDUSTRIES LTD 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.