Correlation Between Rico Auto and Man Infraconstructio

Can any of the company-specific risk be diversified away by investing in both Rico Auto and Man Infraconstructio 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 Man Infraconstructio 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 Man Infraconstruction Limited, you can compare the effects of market volatilities on Rico Auto and Man Infraconstructio 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 Man Infraconstructio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and Man Infraconstructio.

Diversification Opportunities for Rico Auto and Man Infraconstructio

-0.3

Correlation Coefficient

Rico Auto  Man Infraconstructio

Very good diversification

The 3 months correlation between Rico and Man is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and Man Infraconstruction Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Infraconstruction 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 Man Infraconstructio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Infraconstruction has no effect on the direction of Rico Auto i.e., Rico Auto and Man Infraconstructio go up and down completely randomly.

Pair Corralation between Rico Auto and Man Infraconstructio

Assuming the 90 days trading horizon Rico Auto Industries is expected to under-perform the Man Infraconstructio. In addition to that, Rico Auto is 1.24 times more volatile than Man Infraconstruction Limited. It trades about -0.07 of its total potential returns per unit of risk. Man Infraconstruction Limited is currently generating about 0.15 per unit of volatility. If you would invest  19,003  in Man Infraconstruction Limited on October 9, 2024 and sell it today you would earn a total of  4,990  from holding Man Infraconstruction Limited or generate 26.26% return on investment over 90 days.

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

Rico Auto Industries  vs.  Man Infraconstruction Limited

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

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 unfluctuating 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.

Man Infraconstruction

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rico Auto and Man Infraconstructio

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

The idea behind Rico Auto Industries and Man Infraconstruction 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.