Correlation Between TECIL Chemicals and Nahar Industrial

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

By analyzing existing cross correlation between TECIL Chemicals and and Nahar Industrial Enterprises, you can compare the effects of market volatilities on TECIL Chemicals and Nahar Industrial 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 TECIL Chemicals with a short position of Nahar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECIL Chemicals and Nahar Industrial.

Diversification Opportunities for TECIL Chemicals and Nahar Industrial

-0.34

Correlation Coefficient

TECIL Chemicals  Nahar Industrial

Very good diversification

The 3 months correlation between TECIL and Nahar is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TECIL Chemicals and and Nahar Industrial Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nahar Industrial Ent and TECIL Chemicals 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 TECIL Chemicals and are associated (or correlated) with Nahar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nahar Industrial Ent has no effect on the direction of TECIL Chemicals i.e., TECIL Chemicals and Nahar Industrial go up and down completely randomly.

Pair Corralation between TECIL Chemicals and Nahar Industrial

Assuming the 90 days trading horizon TECIL Chemicals and is expected to under-perform the Nahar Industrial. But the stock apears to be less risky and, when comparing its historical volatility, TECIL Chemicals and is 1.45 times less risky than Nahar Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Nahar Industrial Enterprises is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13,225  in Nahar Industrial Enterprises on September 26, 2024 and sell it today you would earn a total of  949.00  from holding Nahar Industrial Enterprises or generate 7.18% return on investment over 90 days.

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

TECIL Chemicals and  vs.  Nahar Industrial Enterprises

TECIL Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TECIL Chemicals and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, TECIL Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TECIL Chemicals and Nahar Industrial

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

The idea behind TECIL Chemicals and and Nahar Industrial Enterprises 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.