Correlation Between OnMobile Global and Tamilnad Mercantile

Can any of the company-specific risk be diversified away by investing in both OnMobile Global and Tamilnad Mercantile 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 OnMobile Global and Tamilnad Mercantile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OnMobile Global Limited and Tamilnad Mercantile Bank, you can compare the effects of market volatilities on OnMobile Global and Tamilnad Mercantile 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 OnMobile Global with a short position of Tamilnad Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of OnMobile Global and Tamilnad Mercantile.

Diversification Opportunities for OnMobile Global and Tamilnad Mercantile

-0.04

Correlation Coefficient

OnMobile Global  Tamilnad Mercantile

Good diversification

The 3 months correlation between OnMobile and Tamilnad is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding OnMobile Global Limited and Tamilnad Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamilnad Mercantile Bank and OnMobile Global 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 OnMobile Global Limited are associated (or correlated) with Tamilnad Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamilnad Mercantile Bank has no effect on the direction of OnMobile Global i.e., OnMobile Global and Tamilnad Mercantile go up and down completely randomly.

Pair Corralation between OnMobile Global and Tamilnad Mercantile

Assuming the 90 days trading horizon OnMobile Global Limited is expected to under-perform the Tamilnad Mercantile. But the stock apears to be less risky and, when comparing its historical volatility, OnMobile Global Limited is 1.1 times less risky than Tamilnad Mercantile. The stock trades about -0.38 of its potential returns per unit of risk. The Tamilnad Mercantile Bank is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  45,945  in Tamilnad Mercantile Bank on September 28, 2024 and sell it today you would lose (60.00) from holding Tamilnad Mercantile Bank or give up 0.13% of portfolio value over 90 days.

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

OnMobile Global Limited  vs.  Tamilnad Mercantile Bank

OnMobile Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OnMobile Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tamilnad Mercantile Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tamilnad Mercantile Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Tamilnad Mercantile is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OnMobile Global and Tamilnad Mercantile

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

The idea behind OnMobile Global Limited and Tamilnad Mercantile 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.