Correlation Between Orissa Minerals and HEG

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

By analyzing existing cross correlation between The Orissa Minerals and HEG Limited, you can compare the effects of market volatilities on Orissa Minerals and HEG 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 Orissa Minerals with a short position of HEG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orissa Minerals and HEG.

Diversification Opportunities for Orissa Minerals and HEG

0.05

Correlation Coefficient

Orissa Minerals  HEG

Significant diversification

The 3 months correlation between Orissa and HEG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited and Orissa Minerals 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 The Orissa Minerals are associated (or correlated) with HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Orissa Minerals i.e., Orissa Minerals and HEG go up and down completely randomly.

Pair Corralation between Orissa Minerals and HEG

Assuming the 90 days trading horizon The Orissa Minerals is expected to under-perform the HEG. But the stock apears to be less risky and, when comparing its historical volatility, The Orissa Minerals is 56.49 times less risky than HEG. The stock trades about 0.0 of its potential returns per unit of risk. The HEG Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  94,876,700  in HEG Limited on October 21, 2024 and sell it today you would lose (94,833,685) from holding HEG Limited or give up 99.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

The Orissa Minerals  vs.  HEG Limited

Orissa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

HEG Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orissa Minerals and HEG

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

The idea behind The Orissa Minerals and HEG Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.