Correlation Between TECIL Chemicals and Rajnandini Metal

Can any of the company-specific risk be diversified away by investing in both TECIL Chemicals and Rajnandini 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 TECIL Chemicals and Rajnandini Metal 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 Rajnandini Metal Limited, you can compare the effects of market volatilities on TECIL Chemicals and Rajnandini 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 TECIL Chemicals with a short position of Rajnandini Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECIL Chemicals and Rajnandini Metal.

Diversification Opportunities for TECIL Chemicals and Rajnandini Metal

0.69

Correlation Coefficient

TECIL Chemicals  Rajnandini Metal

Poor diversification

The 3 months correlation between TECIL and Rajnandini is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TECIL Chemicals and and Rajnandini Metal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rajnandini Metal 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 Rajnandini Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rajnandini Metal has no effect on the direction of TECIL Chemicals i.e., TECIL Chemicals and Rajnandini Metal go up and down completely randomly.

Pair Corralation between TECIL Chemicals and Rajnandini Metal

Assuming the 90 days trading horizon TECIL Chemicals and is expected to generate 1.41 times more return on investment than Rajnandini Metal. However, TECIL Chemicals is 1.41 times more volatile than Rajnandini Metal Limited. It trades about -0.02 of its potential returns per unit of risk. Rajnandini Metal Limited is currently generating about -0.43 per unit of risk. If you would invest  2,567  in TECIL Chemicals and on December 26, 2024 and sell it today you would lose (238.00) from holding TECIL Chemicals and or give up 9.27% of portfolio value over 90 days.

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

TECIL Chemicals and  vs.  Rajnandini Metal Limited

TECIL Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days TECIL Chemicals and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, TECIL Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Rajnandini Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rajnandini Metal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TECIL Chemicals and Rajnandini Metal

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

The idea behind TECIL Chemicals and and Rajnandini Metal 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.