Correlation Between UFO Moviez and Maithan Alloys

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

By analyzing existing cross correlation between UFO Moviez India and Maithan Alloys Limited, you can compare the effects of market volatilities on UFO Moviez and Maithan Alloys 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 UFO Moviez with a short position of Maithan Alloys. Check out your portfolio center. Please also check ongoing floating volatility patterns of UFO Moviez and Maithan Alloys.

Diversification Opportunities for UFO Moviez and Maithan Alloys

0.39

Correlation Coefficient

UFO Moviez  Maithan Alloys

Weak diversification

The 3 months correlation between UFO and Maithan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding UFO Moviez India and Maithan Alloys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maithan Alloys and UFO Moviez 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 UFO Moviez India are associated (or correlated) with Maithan Alloys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maithan Alloys has no effect on the direction of UFO Moviez i.e., UFO Moviez and Maithan Alloys go up and down completely randomly.

Pair Corralation between UFO Moviez and Maithan Alloys

Assuming the 90 days trading horizon UFO Moviez India is expected to under-perform the Maithan Alloys. But the stock apears to be less risky and, when comparing its historical volatility, UFO Moviez India is 1.26 times less risky than Maithan Alloys. The stock trades about -0.02 of its potential returns per unit of risk. The Maithan Alloys Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  106,560  in Maithan Alloys Limited on September 29, 2024 and sell it today you would earn a total of  4,620  from holding Maithan Alloys Limited or generate 4.34% return on investment over 90 days.

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

UFO Moviez India  vs.  Maithan Alloys Limited

UFO Moviez India

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maithan Alloys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maithan Alloys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Maithan Alloys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UFO Moviez and Maithan Alloys

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

The idea behind UFO Moviez India and Maithan Alloys 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.

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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.