Correlation Between Ama Marine and Phol Dhanya

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

By analyzing existing cross correlation between Ama Marine Public and Phol Dhanya Public, you can compare the effects of market volatilities on Ama Marine and Phol Dhanya 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 Ama Marine with a short position of Phol Dhanya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ama Marine and Phol Dhanya.

Diversification Opportunities for Ama Marine and Phol Dhanya

0.87

Correlation Coefficient

Ama Marine  Phol Dhanya

Very poor diversification

The 3 months correlation between Ama and Phol is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ama Marine Public and Phol Dhanya Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phol Dhanya Public and Ama Marine 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 Ama Marine Public are associated (or correlated) with Phol Dhanya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phol Dhanya Public has no effect on the direction of Ama Marine i.e., Ama Marine and Phol Dhanya go up and down completely randomly.

Pair Corralation between Ama Marine and Phol Dhanya

Assuming the 90 days trading horizon Ama Marine is expected to generate 51.36 times less return on investment than Phol Dhanya. But when comparing it to its historical volatility, Ama Marine Public is 41.75 times less risky than Phol Dhanya. It trades about 0.05 of its potential returns per unit of risk. Phol Dhanya Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Phol Dhanya Public on September 14, 2024 and sell it today you would earn a total of  50.00  from holding Phol Dhanya Public or generate 19.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.62%
Values	Daily Returns

Ama Marine Public  vs.  Phol Dhanya Public

Ama Marine Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ama Marine Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Phol Dhanya Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phol Dhanya Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Phol Dhanya is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ama Marine and Phol Dhanya

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

The idea behind Ama Marine Public and Phol Dhanya Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.