Correlation Between V Mart and Cholamandalam Investment

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

By analyzing existing cross correlation between V Mart Retail Limited and Cholamandalam Investment and, you can compare the effects of market volatilities on V Mart and Cholamandalam Investment 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 V Mart with a short position of Cholamandalam Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Mart and Cholamandalam Investment.

Diversification Opportunities for V Mart and Cholamandalam Investment

0.74

Correlation Coefficient

V Mart  Cholamandalam Investment

Poor diversification

The 3 months correlation between VMART and Cholamandalam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and Cholamandalam Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Investment and V Mart 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 V Mart Retail Limited are associated (or correlated) with Cholamandalam Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Investment has no effect on the direction of V Mart i.e., V Mart and Cholamandalam Investment go up and down completely randomly.

Pair Corralation between V Mart and Cholamandalam Investment

Assuming the 90 days trading horizon V Mart Retail Limited is expected to under-perform the Cholamandalam Investment. In addition to that, V Mart is 1.19 times more volatile than Cholamandalam Investment and. It trades about -0.15 of its total potential returns per unit of risk. Cholamandalam Investment and is currently generating about -0.11 per unit of volatility. If you would invest  149,825  in Cholamandalam Investment and on October 11, 2024 and sell it today you would lose (22,300) from holding Cholamandalam Investment and or give up 14.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

V Mart Retail Limited  vs.  Cholamandalam Investment and

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cholamandalam Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with V Mart and Cholamandalam Investment

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

The idea behind V Mart Retail Limited and Cholamandalam Investment and 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.