Correlation Between Ratnamani Metals and Naga Dhunseri

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

By analyzing existing cross correlation between Ratnamani Metals Tubes and Naga Dhunseri Group, you can compare the effects of market volatilities on Ratnamani Metals and Naga Dhunseri 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 Ratnamani Metals with a short position of Naga Dhunseri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratnamani Metals and Naga Dhunseri.

Diversification Opportunities for Ratnamani Metals and Naga Dhunseri

0.87

Correlation Coefficient

Ratnamani Metals  Naga Dhunseri

Very poor diversification

The 3 months correlation between Ratnamani and Naga is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ratnamani Metals Tubes and Naga Dhunseri Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naga Dhunseri Group and Ratnamani Metals 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 Ratnamani Metals Tubes are associated (or correlated) with Naga Dhunseri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naga Dhunseri Group has no effect on the direction of Ratnamani Metals i.e., Ratnamani Metals and Naga Dhunseri go up and down completely randomly.

Pair Corralation between Ratnamani Metals and Naga Dhunseri

Assuming the 90 days trading horizon Ratnamani Metals Tubes is expected to generate 0.6 times more return on investment than Naga Dhunseri. However, Ratnamani Metals Tubes is 1.66 times less risky than Naga Dhunseri. It trades about -0.18 of its potential returns per unit of risk. Naga Dhunseri Group is currently generating about -0.2 per unit of risk. If you would invest  352,575  in Ratnamani Metals Tubes on October 23, 2024 and sell it today you would lose (57,400) from holding Ratnamani Metals Tubes or give up 16.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ratnamani Metals Tubes  vs.  Naga Dhunseri Group

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Naga Dhunseri Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naga Dhunseri Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Ratnamani Metals and Naga Dhunseri

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

The idea behind Ratnamani Metals Tubes and Naga Dhunseri Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.