Correlation Between UTI Asset and Maithan Alloys

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

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

Diversification Opportunities for UTI Asset and Maithan Alloys

0.27

Correlation Coefficient

UTI Asset  Maithan Alloys

Modest diversification

The 3 months correlation between UTI and Maithan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management and Maithan Alloys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maithan Alloys and UTI Asset 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 UTI Asset Management 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 UTI Asset i.e., UTI Asset and Maithan Alloys go up and down completely randomly.

Pair Corralation between UTI Asset and Maithan Alloys

Assuming the 90 days trading horizon UTI Asset is expected to generate 1.18 times less return on investment than Maithan Alloys. But when comparing it to its historical volatility, UTI Asset Management is 1.03 times less risky than Maithan Alloys. It trades about 0.07 of its potential returns per unit of risk. Maithan Alloys Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  107,610  in Maithan Alloys Limited on October 3, 2024 and sell it today you would earn a total of  4,305  from holding Maithan Alloys Limited or generate 4.0% return on investment over 90 days.

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

UTI Asset Management  vs.  Maithan Alloys Limited

UTI Asset Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UTI Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UTI Asset and Maithan Alloys

The main advantage of trading using opposite UTI Asset and Maithan Alloys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTI Asset 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 UTI Asset Management 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.