Correlation Between Zenith Steel and Hindustan Copper

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

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

Diversification Opportunities for Zenith Steel and Hindustan Copper

0.73

Correlation Coefficient

Zenith Steel  Hindustan Copper

Poor diversification

The 3 months correlation between Zenith and Hindustan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Zenith Steel Pipes and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper and Zenith 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 Zenith Steel Pipes are associated (or correlated) with Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Zenith Steel i.e., Zenith Steel and Hindustan Copper go up and down completely randomly.

Pair Corralation between Zenith Steel and Hindustan Copper

Assuming the 90 days trading horizon Zenith Steel Pipes is expected to under-perform the Hindustan Copper. In addition to that, Zenith Steel is 1.25 times more volatile than Hindustan Copper Limited. It trades about -0.08 of its total potential returns per unit of risk. Hindustan Copper Limited is currently generating about -0.05 per unit of volatility. If you would invest  24,715  in Hindustan Copper Limited on December 29, 2024 and sell it today you would lose (2,636) from holding Hindustan Copper Limited or give up 10.67% of portfolio value over 90 days.

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

Zenith Steel Pipes  vs.  Hindustan Copper Limited

Zenith Steel Pipes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zenith Steel Pipes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hindustan Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Zenith Steel and Hindustan Copper

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

The idea behind Zenith Steel Pipes and Hindustan Copper 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 Commodity Directory module to find actively traded commodities issued by global exchanges.