Correlation Between Can Fin and Dhunseri Investments

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

By analyzing existing cross correlation between Can Fin Homes and Dhunseri Investments Limited, you can compare the effects of market volatilities on Can Fin and Dhunseri Investments 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 Can Fin with a short position of Dhunseri Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Can Fin and Dhunseri Investments.

Diversification Opportunities for Can Fin and Dhunseri Investments

-0.04

Correlation Coefficient

Can Fin  Dhunseri Investments

Good diversification

The 3 months correlation between Can and Dhunseri is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Can Fin Homes and Dhunseri Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhunseri Investments and Can Fin 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 Can Fin Homes are associated (or correlated) with Dhunseri Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhunseri Investments has no effect on the direction of Can Fin i.e., Can Fin and Dhunseri Investments go up and down completely randomly.

Pair Corralation between Can Fin and Dhunseri Investments

Assuming the 90 days trading horizon Can Fin Homes is expected to under-perform the Dhunseri Investments. But the stock apears to be less risky and, when comparing its historical volatility, Can Fin Homes is 2.56 times less risky than Dhunseri Investments. The stock trades about -0.05 of its potential returns per unit of risk. The Dhunseri Investments Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  182,755  in Dhunseri Investments Limited on September 3, 2024 and sell it today you would earn a total of  42,440  from holding Dhunseri Investments Limited or generate 23.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Can Fin Homes  vs.  Dhunseri Investments Limited

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Can Fin is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Dhunseri Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dhunseri Investments Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Dhunseri Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Can Fin and Dhunseri Investments

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

The idea behind Can Fin Homes and Dhunseri Investments 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.