Correlation Between Thirumalai Chemicals and Omkar Speciality

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

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

Diversification Opportunities for Thirumalai Chemicals and Omkar Speciality

0.47

Correlation Coefficient

Thirumalai Chemicals  Omkar Speciality

Very weak diversification

The 3 months correlation between Thirumalai and Omkar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Thirumalai Chemicals Limited and Omkar Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omkar Speciality Che and Thirumalai 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 Thirumalai Chemicals Limited are associated (or correlated) with Omkar Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omkar Speciality Che has no effect on the direction of Thirumalai Chemicals i.e., Thirumalai Chemicals and Omkar Speciality go up and down completely randomly.

Pair Corralation between Thirumalai Chemicals and Omkar Speciality

Assuming the 90 days trading horizon Thirumalai Chemicals Limited is expected to under-perform the Omkar Speciality. In addition to that, Thirumalai Chemicals is 1.14 times more volatile than Omkar Speciality Chemicals. It trades about -0.27 of its total potential returns per unit of risk. Omkar Speciality Chemicals is currently generating about -0.13 per unit of volatility. If you would invest  914.00  in Omkar Speciality Chemicals on November 29, 2024 and sell it today you would lose (178.00) from holding Omkar Speciality Chemicals or give up 19.47% of portfolio value over 90 days.

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

Thirumalai Chemicals Limited  vs.  Omkar Speciality Chemicals

Thirumalai Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thirumalai Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Omkar Speciality Che

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Thirumalai Chemicals and Omkar Speciality

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

The idea behind Thirumalai Chemicals Limited and Omkar Speciality Chemicals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.