Correlation Between Torrent Capital and HYB

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

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

Diversification Opportunities for Torrent Capital and HYB

-0.53

Correlation Coefficient

Torrent Capital  HYB

Excellent diversification

The 3 months correlation between Torrent and HYB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Torrent Capital and HYB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYB and Torrent Capital 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 Torrent Capital are associated (or correlated) with HYB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYB has no effect on the direction of Torrent Capital i.e., Torrent Capital and HYB go up and down completely randomly.

Pair Corralation between Torrent Capital and HYB

Assuming the 90 days horizon Torrent Capital is expected to under-perform the HYB. In addition to that, Torrent Capital is 4.21 times more volatile than HYB. It trades about -0.02 of its total potential returns per unit of risk. HYB is currently generating about 0.08 per unit of volatility. If you would invest  812.00  in HYB on December 27, 2024 and sell it today you would earn a total of  8.00  from holding HYB or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	61.9%
Values	Daily Returns

Torrent Capital  vs.  HYB

Torrent Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torrent Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Torrent Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

HYB

Risk-Adjusted Performance

Modest

Over the last 90 days HYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HYB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Torrent Capital and HYB

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

The idea behind Torrent Capital and HYB 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.