Correlation Between Vibhor Steel and PTC INDUSTRIES

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

By analyzing existing cross correlation between Vibhor Steel Tubes and PTC INDUSTRIES LTD, you can compare the effects of market volatilities on Vibhor Steel and PTC INDUSTRIES 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 Vibhor Steel with a short position of PTC INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vibhor Steel and PTC INDUSTRIES.

Diversification Opportunities for Vibhor Steel and PTC INDUSTRIES

0.63

Correlation Coefficient

Vibhor Steel  PTC INDUSTRIES

Poor diversification

The 3 months correlation between Vibhor and PTC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vibhor Steel Tubes and PTC INDUSTRIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC INDUSTRIES LTD and Vibhor 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 Vibhor Steel Tubes are associated (or correlated) with PTC INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC INDUSTRIES LTD has no effect on the direction of Vibhor Steel i.e., Vibhor Steel and PTC INDUSTRIES go up and down completely randomly.

Pair Corralation between Vibhor Steel and PTC INDUSTRIES

Assuming the 90 days trading horizon Vibhor Steel Tubes is expected to generate 1.46 times more return on investment than PTC INDUSTRIES. However, Vibhor Steel is 1.46 times more volatile than PTC INDUSTRIES LTD. It trades about -0.06 of its potential returns per unit of risk. PTC INDUSTRIES LTD is currently generating about -0.18 per unit of risk. If you would invest  26,640  in Vibhor Steel Tubes on September 15, 2024 and sell it today you would lose (3,310) from holding Vibhor Steel Tubes or give up 12.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Vibhor Steel Tubes  vs.  PTC INDUSTRIES LTD

Vibhor Steel Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhor Steel Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PTC INDUSTRIES LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC INDUSTRIES LTD 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 fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vibhor Steel and PTC INDUSTRIES

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

The idea behind Vibhor Steel Tubes and PTC INDUSTRIES LTD 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.