Correlation Between Omkar Speciality and Federal Bank

Can any of the company-specific risk be diversified away by investing in both Omkar Speciality and Federal Bank 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 Omkar Speciality and Federal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Omkar Speciality Chemicals and The Federal Bank, you can compare the effects of market volatilities on Omkar Speciality and Federal Bank 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 Omkar Speciality with a short position of Federal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omkar Speciality and Federal Bank.

Diversification Opportunities for Omkar Speciality and Federal Bank

0.06

Correlation Coefficient

Omkar Speciality  Federal Bank

Significant diversification

The 3 months correlation between Omkar and Federal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and The Federal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Bank and Omkar Speciality 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 Omkar Speciality Chemicals are associated (or correlated) with Federal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Bank has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and Federal Bank go up and down completely randomly.

Pair Corralation between Omkar Speciality and Federal Bank

Assuming the 90 days trading horizon Omkar Speciality Chemicals is expected to under-perform the Federal Bank. In addition to that, Omkar Speciality is 1.77 times more volatile than The Federal Bank. It trades about -0.01 of its total potential returns per unit of risk. The Federal Bank is currently generating about -0.01 per unit of volatility. If you would invest  19,674  in The Federal Bank on October 12, 2024 and sell it today you would lose (330.00) from holding The Federal Bank or give up 1.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Omkar Speciality Chemicals  vs.  The Federal Bank

Omkar Speciality Che

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Omkar Speciality is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Federal Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Federal Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Federal Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Omkar Speciality and Federal Bank

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

The idea behind Omkar Speciality Chemicals and The Federal Bank 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.