Correlation Between PTC India and Motilal Oswal

Can any of the company-specific risk be diversified away by investing in both PTC India and Motilal Oswal 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 Motilal Oswal 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 Motilal Oswal Financial, you can compare the effects of market volatilities on PTC India and Motilal Oswal 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 Motilal Oswal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC India and Motilal Oswal.

Diversification Opportunities for PTC India and Motilal Oswal

-0.62

Correlation Coefficient

PTC India  Motilal Oswal

Excellent diversification

The 3 months correlation between PTC and Motilal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PTC India Financial and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial 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 Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of PTC India i.e., PTC India and Motilal Oswal go up and down completely randomly.

Pair Corralation between PTC India and Motilal Oswal

Assuming the 90 days trading horizon PTC India Financial is expected to under-perform the Motilal Oswal. But the stock apears to be less risky and, when comparing its historical volatility, PTC India Financial is 1.45 times less risky than Motilal Oswal. The stock trades about -0.03 of its potential returns per unit of risk. The Motilal Oswal Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  70,365  in Motilal Oswal Financial on October 5, 2024 and sell it today you would earn a total of  28,155  from holding Motilal Oswal Financial or generate 40.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

PTC India Financial  vs.  Motilal Oswal Financial

PTC India Financial

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, PTC India is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Motilal Oswal Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PTC India and Motilal Oswal

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

The idea behind PTC India Financial and Motilal Oswal Financial 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.