Correlation Between Tera Software and Ankit Metal

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

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

Diversification Opportunities for Tera Software and Ankit Metal

-0.16

Correlation Coefficient

Tera Software  Ankit Metal

Good diversification

The 3 months correlation between Tera and Ankit is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tera Software 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 Tera Software 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 Tera Software 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 Tera Software i.e., Tera Software and Ankit Metal go up and down completely randomly.

Pair Corralation between Tera Software and Ankit Metal

Assuming the 90 days trading horizon Tera Software Limited is expected to generate 0.8 times more return on investment than Ankit Metal. However, Tera Software Limited is 1.25 times less risky than Ankit Metal. It trades about -0.1 of its potential returns per unit of risk. Ankit Metal Power is currently generating about -0.23 per unit of risk. If you would invest  20,130  in Tera Software Limited on December 1, 2024 and sell it today you would lose (3,405) from holding Tera Software Limited or give up 16.92% of portfolio value over 90 days.

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

Tera Software Limited  vs.  Ankit Metal Power

Tera Software Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tera Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ankit Metal Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ankit Metal Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tera Software and Ankit Metal

The main advantage of trading using opposite Tera Software and Ankit Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tera Software 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 Tera Software 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.