Correlation Between Popular Vehicles and Muthoot Finance

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

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

Diversification Opportunities for Popular Vehicles and Muthoot Finance

-0.08

Correlation Coefficient

Popular Vehicles  Muthoot Finance

Good diversification

The 3 months correlation between Popular and Muthoot is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Popular Vehicles and and Muthoot Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muthoot Finance and Popular Vehicles 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 Popular Vehicles and are associated (or correlated) with Muthoot Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muthoot Finance has no effect on the direction of Popular Vehicles i.e., Popular Vehicles and Muthoot Finance go up and down completely randomly.

Pair Corralation between Popular Vehicles and Muthoot Finance

Assuming the 90 days trading horizon Popular Vehicles and is expected to under-perform the Muthoot Finance. In addition to that, Popular Vehicles is 1.3 times more volatile than Muthoot Finance Limited. It trades about -0.12 of its total potential returns per unit of risk. Muthoot Finance Limited is currently generating about 0.11 per unit of volatility. If you would invest  102,537  in Muthoot Finance Limited on October 7, 2024 and sell it today you would earn a total of  121,188  from holding Muthoot Finance Limited or generate 118.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.57%
Values	Daily Returns

Popular Vehicles and  vs.  Muthoot Finance Limited

Popular Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Popular Vehicles and 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Muthoot Finance

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Muthoot Finance Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Muthoot Finance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Popular Vehicles and Muthoot Finance

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

The idea behind Popular Vehicles and and Muthoot Finance 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.