Correlation Between Tata Steel and Ankit Metal

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

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

Diversification Opportunities for Tata Steel and Ankit Metal

-0.49

Correlation Coefficient

Tata Steel  Ankit Metal

Very good diversification

The 3 months correlation between Tata and Ankit is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tata Steel Limited and Ankit Metal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankit Metal Power and Tata Steel 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 Steel Limited are associated (or correlated) with Ankit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankit Metal Power has no effect on the direction of Tata Steel i.e., Tata Steel and Ankit Metal go up and down completely randomly.

Pair Corralation between Tata Steel and Ankit Metal

Assuming the 90 days trading horizon Tata Steel Limited is expected to generate 0.58 times more return on investment than Ankit Metal. However, Tata Steel Limited is 1.73 times less risky than Ankit Metal. It trades about 0.02 of its potential returns per unit of risk. Ankit Metal Power is currently generating about -0.01 per unit of risk. If you would invest  11,392  in Tata Steel Limited on October 25, 2024 and sell it today you would earn a total of  1,500  from holding Tata Steel Limited or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.09%
Values	Daily Returns

Tata Steel Limited  vs.  Ankit Metal Power

Tata Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ankit Metal Power

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ankit Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tata Steel and Ankit Metal

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

The idea behind Tata Steel Limited and Ankit Metal Power 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.