Correlation Between PB Fintech and UltraTech Cement

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

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

Diversification Opportunities for PB Fintech and UltraTech Cement

0.65

Correlation Coefficient

PB Fintech  UltraTech Cement

Poor diversification

The 3 months correlation between POLICYBZR and UltraTech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PB Fintech Limited and UltraTech Cement Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UltraTech Cement and PB Fintech 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 PB Fintech Limited are associated (or correlated) with UltraTech Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UltraTech Cement has no effect on the direction of PB Fintech i.e., PB Fintech and UltraTech Cement go up and down completely randomly.

Pair Corralation between PB Fintech and UltraTech Cement

Assuming the 90 days trading horizon PB Fintech Limited is expected to generate 1.97 times more return on investment than UltraTech Cement. However, PB Fintech is 1.97 times more volatile than UltraTech Cement Limited. It trades about 0.14 of its potential returns per unit of risk. UltraTech Cement Limited is currently generating about 0.08 per unit of risk. If you would invest  45,080  in PB Fintech Limited on October 7, 2024 and sell it today you would earn a total of  176,505  from holding PB Fintech Limited or generate 391.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

PB Fintech Limited  vs.  UltraTech Cement Limited

PB Fintech Limited

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PB Fintech Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, PB Fintech sustained solid returns over the last few months and may actually be approaching a breakup point.

UltraTech Cement

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UltraTech Cement Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, UltraTech Cement is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PB Fintech and UltraTech Cement

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

The idea behind PB Fintech Limited and UltraTech Cement 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.