Correlation Between Tata Investment and Page Industries

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

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

Diversification Opportunities for Tata Investment and Page Industries

0.06

Correlation Coefficient

Tata Investment  Page Industries

Significant diversification

The 3 months correlation between Tata and Page is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tata Investment and Page Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Page Industries and Tata Investment 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 Tata Investment are associated (or correlated) with Page Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Page Industries has no effect on the direction of Tata Investment i.e., Tata Investment and Page Industries go up and down completely randomly.

Pair Corralation between Tata Investment and Page Industries

Assuming the 90 days trading horizon Tata Investment is expected to under-perform the Page Industries. In addition to that, Tata Investment is 1.06 times more volatile than Page Industries Limited. It trades about -0.07 of its total potential returns per unit of risk. Page Industries Limited is currently generating about 0.08 per unit of volatility. If you would invest  4,314,525  in Page Industries Limited on October 23, 2024 and sell it today you would earn a total of  319,460  from holding Page Industries Limited or generate 7.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tata Investment  vs.  Page Industries Limited

Tata Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Page Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Page Industries Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Page Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tata Investment and Page Industries

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

The idea behind Tata Investment and Page Industries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.