Correlation Between Pritish Nandy and HEG

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

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

Diversification Opportunities for Pritish Nandy and HEG

0.16

Correlation Coefficient

Pritish Nandy  HEG

Average diversification

The 3 months correlation between Pritish and HEG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pritish Nandy Communications and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited and Pritish Nandy 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 Pritish Nandy Communications 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 Pritish Nandy i.e., Pritish Nandy and HEG go up and down completely randomly.

Pair Corralation between Pritish Nandy and HEG

Assuming the 90 days trading horizon Pritish Nandy Communications is expected to under-perform the HEG. But the stock apears to be less risky and, when comparing its historical volatility, Pritish Nandy Communications is 25.79 times less risky than HEG. The stock trades about -0.01 of its potential returns per unit of risk. The HEG Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  42,760  in HEG Limited on September 21, 2024 and sell it today you would earn a total of  14,025  from holding HEG Limited or generate 32.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Pritish Nandy Communications  vs.  HEG Limited

Pritish Nandy Commun

Risk-Adjusted Performance

0 of 100

Very Weak

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

HEG Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEG Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, HEG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pritish Nandy and HEG

The main advantage of trading using opposite Pritish Nandy and HEG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pritish Nandy 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 Pritish Nandy Communications 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 Transaction History module to view history of all your transactions and understand their impact on performance.