Correlation Between Rajnandini Metal and Bosch

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

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

Diversification Opportunities for Rajnandini Metal and Bosch

-0.48

Correlation Coefficient

Rajnandini Metal  Bosch

Very good diversification

The 3 months correlation between Rajnandini and Bosch is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rajnandini Metal Limited and Bosch Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosch Limited and Rajnandini Metal 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 Rajnandini Metal Limited are associated (or correlated) with Bosch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosch Limited has no effect on the direction of Rajnandini Metal i.e., Rajnandini Metal and Bosch go up and down completely randomly.

Pair Corralation between Rajnandini Metal and Bosch

Assuming the 90 days trading horizon Rajnandini Metal is expected to generate 1.86 times less return on investment than Bosch. In addition to that, Rajnandini Metal is 2.39 times more volatile than Bosch Limited. It trades about 0.03 of its total potential returns per unit of risk. Bosch Limited is currently generating about 0.13 per unit of volatility. If you would invest  2,162,688  in Bosch Limited on September 4, 2024 and sell it today you would earn a total of  1,330,127  from holding Bosch Limited or generate 61.5% return on investment over 90 days.

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

Rajnandini Metal Limited  vs.  Bosch Limited

Rajnandini Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rajnandini Metal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bosch Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bosch Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Bosch may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rajnandini Metal and Bosch

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

The idea behind Rajnandini Metal Limited and Bosch 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.