Correlation Between Wipro and Motilal Oswal

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

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

Diversification Opportunities for Wipro and Motilal Oswal

0.23

Correlation Coefficient

Wipro  Motilal Oswal

Modest diversification

The 3 months correlation between Wipro and Motilal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wipro Limited and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial and Wipro 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 Wipro Limited are associated (or correlated) with Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of Wipro i.e., Wipro and Motilal Oswal go up and down completely randomly.

Pair Corralation between Wipro and Motilal Oswal

Assuming the 90 days trading horizon Wipro Limited is expected to generate 4.2 times more return on investment than Motilal Oswal. However, Wipro is 4.2 times more volatile than Motilal Oswal Financial. It trades about 0.07 of its potential returns per unit of risk. Motilal Oswal Financial is currently generating about 0.1 per unit of risk. If you would invest  26,640  in Wipro Limited on October 9, 2024 and sell it today you would earn a total of  2,790  from holding Wipro Limited or generate 10.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Wipro Limited  vs.  Motilal Oswal Financial

Wipro Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wipro Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wipro displayed solid returns over the last few months and may actually be approaching a breakup point.

Motilal Oswal Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wipro and Motilal Oswal

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

The idea behind Wipro Limited and Motilal Oswal Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.