Correlation Between PTC India and Deepak Fertilizers

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

By analyzing existing cross correlation between PTC India Financial and Deepak Fertilizers and, you can compare the effects of market volatilities on PTC India and Deepak Fertilizers 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 PTC India with a short position of Deepak Fertilizers. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC India and Deepak Fertilizers.

Diversification Opportunities for PTC India and Deepak Fertilizers

0.59

Correlation Coefficient

PTC India  Deepak Fertilizers

Very weak diversification

The 3 months correlation between PTC and Deepak is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PTC India Financial and Deepak Fertilizers and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deepak Fertilizers and and PTC India 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 PTC India Financial are associated (or correlated) with Deepak Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deepak Fertilizers and has no effect on the direction of PTC India i.e., PTC India and Deepak Fertilizers go up and down completely randomly.

Pair Corralation between PTC India and Deepak Fertilizers

Assuming the 90 days trading horizon PTC India Financial is expected to under-perform the Deepak Fertilizers. But the stock apears to be less risky and, when comparing its historical volatility, PTC India Financial is 1.28 times less risky than Deepak Fertilizers. The stock trades about -0.12 of its potential returns per unit of risk. The Deepak Fertilizers and is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  119,070  in Deepak Fertilizers and on December 25, 2024 and sell it today you would lose (5,235) from holding Deepak Fertilizers and or give up 4.4% of portfolio value over 90 days.

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

PTC India Financial  vs.  Deepak Fertilizers and

PTC India Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Deepak Fertilizers and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deepak Fertilizers and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Deepak Fertilizers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PTC India and Deepak Fertilizers

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

The idea behind PTC India Financial and Deepak Fertilizers and 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.