Correlation Between Rico Auto and Manaksia Coated

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

By analyzing existing cross correlation between Rico Auto Industries and Manaksia Coated Metals, you can compare the effects of market volatilities on Rico Auto and Manaksia Coated 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 Rico Auto with a short position of Manaksia Coated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and Manaksia Coated.

Diversification Opportunities for Rico Auto and Manaksia Coated

0.31

Correlation Coefficient

Rico Auto  Manaksia Coated

Weak diversification

The 3 months correlation between Rico and Manaksia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals and Rico Auto 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 Rico Auto Industries are associated (or correlated) with Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of Rico Auto i.e., Rico Auto and Manaksia Coated go up and down completely randomly.

Pair Corralation between Rico Auto and Manaksia Coated

Assuming the 90 days trading horizon Rico Auto Industries is expected to under-perform the Manaksia Coated. In addition to that, Rico Auto is 1.34 times more volatile than Manaksia Coated Metals. It trades about -0.13 of its total potential returns per unit of risk. Manaksia Coated Metals is currently generating about 0.02 per unit of volatility. If you would invest  7,797  in Manaksia Coated Metals on December 2, 2024 and sell it today you would earn a total of  56.00  from holding Manaksia Coated Metals or generate 0.72% return on investment over 90 days.

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

Rico Auto Industries  vs.  Manaksia Coated Metals

Rico Auto Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rico Auto Industries 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Manaksia Coated Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Manaksia Coated is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rico Auto and Manaksia Coated

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

The idea behind Rico Auto Industries and Manaksia Coated Metals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.