Correlation Between Visa Steel and Hexa Tradex

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

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

Diversification Opportunities for Visa Steel and Hexa Tradex

0.15

Correlation Coefficient

Visa Steel  Hexa Tradex

Average diversification

The 3 months correlation between Visa and Hexa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Steel Limited and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited and Visa Steel 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 Visa Steel Limited are associated (or correlated) with Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of Visa Steel i.e., Visa Steel and Hexa Tradex go up and down completely randomly.

Pair Corralation between Visa Steel and Hexa Tradex

Assuming the 90 days trading horizon Visa Steel Limited is expected to generate 0.81 times more return on investment than Hexa Tradex. However, Visa Steel Limited is 1.24 times less risky than Hexa Tradex. It trades about 0.0 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about -0.16 per unit of risk. If you would invest  3,236  in Visa Steel Limited on December 26, 2024 and sell it today you would lose (76.00) from holding Visa Steel Limited or give up 2.35% of portfolio value over 90 days.

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

Visa Steel Limited  vs.  Hexa Tradex Limited

Visa Steel Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Visa Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Visa Steel is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Hexa Tradex Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexa Tradex 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa Steel and Hexa Tradex

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

The idea behind Visa Steel Limited and Hexa Tradex 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.