Correlation Between Omkar Speciality and Raj Rayon

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Can any of the company-specific risk be diversified away by investing in both Omkar Speciality and Raj Rayon 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 Raj Rayon 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 Raj Rayon Industries, you can compare the effects of market volatilities on Omkar Speciality and Raj Rayon 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 Raj Rayon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omkar Speciality and Raj Rayon.

Diversification Opportunities for Omkar Speciality and Raj Rayon

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Omkar and Raj is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and Raj Rayon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raj Rayon Industries 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 Raj Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raj Rayon Industries has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and Raj Rayon go up and down completely randomly.

Pair Corralation between Omkar Speciality and Raj Rayon

Assuming the 90 days trading horizon Omkar Speciality Chemicals is expected to generate 1.78 times more return on investment than Raj Rayon. However, Omkar Speciality is 1.78 times more volatile than Raj Rayon Industries. It trades about -0.01 of its potential returns per unit of risk. Raj Rayon Industries is currently generating about -0.08 per unit of risk. If you would invest  1,320  in Omkar Speciality Chemicals on October 10, 2024 and sell it today you would lose (368.00) from holding Omkar Speciality Chemicals or give up 27.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.67%
ValuesDaily Returns

Omkar Speciality Chemicals  vs.  Raj Rayon Industries

 Performance 
       Timeline  
Omkar Speciality Che 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price confusion, may contribute to short-horizon losses for the traders.
Raj Rayon Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Raj Rayon Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Raj Rayon is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Omkar Speciality and Raj Rayon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Omkar Speciality and Raj Rayon

The main advantage of trading using opposite Omkar Speciality and Raj Rayon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omkar Speciality position performs unexpectedly, Raj Rayon 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 Raj Rayon will offset losses from the drop in Raj Rayon's long position.
The idea behind Omkar Speciality Chemicals and Raj Rayon 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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