Correlation Between Ankit Metal and Royal Orchid

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

By analyzing existing cross correlation between Ankit Metal Power and Royal Orchid Hotels, you can compare the effects of market volatilities on Ankit Metal and Royal Orchid 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 Ankit Metal with a short position of Royal Orchid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ankit Metal and Royal Orchid.

Diversification Opportunities for Ankit Metal and Royal Orchid

0.27

Correlation Coefficient

Ankit Metal  Royal Orchid

Modest diversification

The 3 months correlation between Ankit and Royal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Royal Orchid Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Orchid Hotels and Ankit Metal 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 Ankit Metal Power are associated (or correlated) with Royal Orchid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Orchid Hotels has no effect on the direction of Ankit Metal i.e., Ankit Metal and Royal Orchid go up and down completely randomly.

Pair Corralation between Ankit Metal and Royal Orchid

Assuming the 90 days trading horizon Ankit Metal Power is expected to under-perform the Royal Orchid. In addition to that, Ankit Metal is 1.48 times more volatile than Royal Orchid Hotels. It trades about -0.07 of its total potential returns per unit of risk. Royal Orchid Hotels is currently generating about -0.09 per unit of volatility. If you would invest  36,665  in Royal Orchid Hotels on September 1, 2024 and sell it today you would lose (4,405) from holding Royal Orchid Hotels or give up 12.01% of portfolio value over 90 days.

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

Ankit Metal Power  vs.  Royal Orchid Hotels

Ankit Metal Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ankit Metal Power 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 basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Royal Orchid Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Orchid Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ankit Metal and Royal Orchid

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

The idea behind Ankit Metal Power and Royal Orchid Hotels 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.