Correlation Between Thermax and Ankit Metal

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

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

Diversification Opportunities for Thermax and Ankit Metal

-0.56

Correlation Coefficient

Thermax  Ankit Metal

Excellent diversification

The 3 months correlation between Thermax and Ankit is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Thermax 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 Thermax 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 Thermax 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 Thermax i.e., Thermax and Ankit Metal go up and down completely randomly.

Pair Corralation between Thermax and Ankit Metal

Assuming the 90 days trading horizon Thermax Limited is expected to generate 0.81 times more return on investment than Ankit Metal. However, Thermax Limited is 1.23 times less risky than Ankit Metal. It trades about 0.08 of its potential returns per unit of risk. Ankit Metal Power is currently generating about 0.0 per unit of risk. If you would invest  200,218  in Thermax Limited on October 10, 2024 and sell it today you would earn a total of  209,522  from holding Thermax Limited or generate 104.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.91%
Values	Daily Returns

Thermax Limited  vs.  Ankit Metal Power

Thermax Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ankit Metal Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ankit Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermax and Ankit Metal

The main advantage of trading using opposite Thermax and Ankit Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermax 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 Thermax 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.