Correlation Between Repco Home and Vraj Iron

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

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

Diversification Opportunities for Repco Home and Vraj Iron

0.62

Correlation Coefficient

Repco Home  Vraj Iron

Poor diversification

The 3 months correlation between Repco and Vraj is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Repco Home Finance and Vraj Iron and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vraj Iron and Repco Home 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 Repco Home Finance are associated (or correlated) with Vraj Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vraj Iron has no effect on the direction of Repco Home i.e., Repco Home and Vraj Iron go up and down completely randomly.

Pair Corralation between Repco Home and Vraj Iron

Assuming the 90 days trading horizon Repco Home Finance is expected to generate 0.87 times more return on investment than Vraj Iron. However, Repco Home Finance is 1.15 times less risky than Vraj Iron. It trades about -0.01 of its potential returns per unit of risk. Vraj Iron and is currently generating about -0.03 per unit of risk. If you would invest  45,870  in Repco Home Finance on October 9, 2024 and sell it today you would lose (4,155) from holding Repco Home Finance or give up 9.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.11%
Values	Daily Returns

Repco Home Finance  vs.  Vraj Iron and

Repco Home Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repco Home Finance 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vraj Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vraj Iron and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Repco Home and Vraj Iron

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

The idea behind Repco Home Finance and Vraj Iron and 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.