Correlation Between Country Club and Thirumalai Chemicals

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

By analyzing existing cross correlation between Country Club Hospitality and Thirumalai Chemicals Limited, you can compare the effects of market volatilities on Country Club and Thirumalai Chemicals 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 Country Club with a short position of Thirumalai Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Club and Thirumalai Chemicals.

Diversification Opportunities for Country Club and Thirumalai Chemicals

0.37

Correlation Coefficient

Country Club  Thirumalai Chemicals

Weak diversification

The 3 months correlation between Country and Thirumalai is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Country Club Hospitality and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai Chemicals and Country Club 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 Country Club Hospitality are associated (or correlated) with Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Country Club i.e., Country Club and Thirumalai Chemicals go up and down completely randomly.

Pair Corralation between Country Club and Thirumalai Chemicals

Assuming the 90 days trading horizon Country Club Hospitality is expected to under-perform the Thirumalai Chemicals. In addition to that, Country Club is 1.24 times more volatile than Thirumalai Chemicals Limited. It trades about -0.05 of its total potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about 0.0 per unit of volatility. If you would invest  33,850  in Thirumalai Chemicals Limited on September 22, 2024 and sell it today you would lose (575.00) from holding Thirumalai Chemicals Limited or give up 1.7% of portfolio value over 90 days.

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

Country Club Hospitality  vs.  Thirumalai Chemicals Limited

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Thirumalai Chemicals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Thirumalai Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Thirumalai Chemicals is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Country Club and Thirumalai Chemicals

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

The idea behind Country Club Hospitality and Thirumalai Chemicals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.