Correlation Between Selan Exploration and Vedanta

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

By analyzing existing cross correlation between Selan Exploration Technology and Vedanta Limited, you can compare the effects of market volatilities on Selan Exploration and Vedanta 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 Selan Exploration with a short position of Vedanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selan Exploration and Vedanta.

Diversification Opportunities for Selan Exploration and Vedanta

0.21

Correlation Coefficient

Selan Exploration  Vedanta

Modest diversification

The 3 months correlation between Selan and Vedanta is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Selan Exploration Technology and Vedanta Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vedanta Limited and Selan Exploration 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 Selan Exploration Technology are associated (or correlated) with Vedanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vedanta Limited has no effect on the direction of Selan Exploration i.e., Selan Exploration and Vedanta go up and down completely randomly.

Pair Corralation between Selan Exploration and Vedanta

Assuming the 90 days trading horizon Selan Exploration Technology is expected to under-perform the Vedanta. In addition to that, Selan Exploration is 1.4 times more volatile than Vedanta Limited. It trades about -0.23 of its total potential returns per unit of risk. Vedanta Limited is currently generating about -0.29 per unit of volatility. If you would invest  48,812  in Vedanta Limited on October 9, 2024 and sell it today you would lose (4,582) from holding Vedanta Limited or give up 9.39% of portfolio value over 90 days.

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

Selan Exploration Technology  vs.  Vedanta Limited

Selan Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selan Exploration Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Selan Exploration is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Vedanta Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vedanta Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Selan Exploration and Vedanta

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

The idea behind Selan Exploration Technology and Vedanta 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.