Correlation Between Shree Pushkar and Maithan Alloys

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

By analyzing existing cross correlation between Shree Pushkar Chemicals and Maithan Alloys Limited, you can compare the effects of market volatilities on Shree Pushkar and Maithan Alloys 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 Shree Pushkar with a short position of Maithan Alloys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shree Pushkar and Maithan Alloys.

Diversification Opportunities for Shree Pushkar and Maithan Alloys

0.66

Correlation Coefficient

Shree Pushkar  Maithan Alloys

Poor diversification

The 3 months correlation between Shree and Maithan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shree Pushkar Chemicals and Maithan Alloys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maithan Alloys and Shree Pushkar 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 Shree Pushkar Chemicals are associated (or correlated) with Maithan Alloys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maithan Alloys has no effect on the direction of Shree Pushkar i.e., Shree Pushkar and Maithan Alloys go up and down completely randomly.

Pair Corralation between Shree Pushkar and Maithan Alloys

Assuming the 90 days trading horizon Shree Pushkar Chemicals is expected to under-perform the Maithan Alloys. In addition to that, Shree Pushkar is 1.26 times more volatile than Maithan Alloys Limited. It trades about -0.11 of its total potential returns per unit of risk. Maithan Alloys Limited is currently generating about -0.08 per unit of volatility. If you would invest  120,870  in Maithan Alloys Limited on October 8, 2024 and sell it today you would lose (4,810) from holding Maithan Alloys Limited or give up 3.98% of portfolio value over 90 days.

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

Shree Pushkar Chemicals  vs.  Maithan Alloys Limited

Shree Pushkar Chemicals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shree Pushkar Chemicals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Shree Pushkar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maithan Alloys

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maithan Alloys Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Maithan Alloys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shree Pushkar and Maithan Alloys

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

The idea behind Shree Pushkar Chemicals and Maithan Alloys 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.