Correlation Between Refex Industries and Hindustan Construction
Can any of the company-specific risk be diversified away by investing in both Refex Industries and Hindustan Construction 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 Refex Industries and Hindustan Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Refex Industries Limited and Hindustan Construction, you can compare the effects of market volatilities on Refex Industries and Hindustan Construction 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 Refex Industries with a short position of Hindustan Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refex Industries and Hindustan Construction.
Diversification Opportunities for Refex Industries and Hindustan Construction
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Refex and Hindustan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Refex Industries Limited and Hindustan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Construction and Refex Industries 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 Refex Industries Limited are associated (or correlated) with Hindustan Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Construction has no effect on the direction of Refex Industries i.e., Refex Industries and Hindustan Construction go up and down completely randomly.
Pair Corralation between Refex Industries and Hindustan Construction
Assuming the 90 days trading horizon Refex Industries Limited is expected to generate 1.0 times more return on investment than Hindustan Construction. However, Refex Industries Limited is 1.0 times less risky than Hindustan Construction. It trades about 0.08 of its potential returns per unit of risk. Hindustan Construction is currently generating about 0.03 per unit of risk. If you would invest 47,060 in Refex Industries Limited on September 13, 2024 and sell it today you would earn a total of 6,635 from holding Refex Industries Limited or generate 14.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Refex Industries Limited vs. Hindustan Construction
Performance |
Timeline |
Refex Industries |
Hindustan Construction |
Refex Industries and Hindustan Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Refex Industries and Hindustan Construction
The main advantage of trading using opposite Refex Industries and Hindustan Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refex Industries position performs unexpectedly, Hindustan Construction 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 Hindustan Construction will offset losses from the drop in Hindustan Construction's long position.Refex Industries vs. SIL Investments Limited | Refex Industries vs. VA Tech Wabag | Refex Industries vs. Newgen Software Technologies | Refex Industries vs. The Investment Trust |
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Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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