Correlation Between Ganesh Housing and MIRC Electronics

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

By analyzing existing cross correlation between Ganesh Housing and MIRC Electronics Limited, you can compare the effects of market volatilities on Ganesh Housing and MIRC Electronics 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 Ganesh Housing with a short position of MIRC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ganesh Housing and MIRC Electronics.

Diversification Opportunities for Ganesh Housing and MIRC Electronics

-0.34

Correlation Coefficient

Ganesh Housing  MIRC Electronics

Very good diversification

The 3 months correlation between Ganesh and MIRC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ganesh Housing and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics and Ganesh Housing 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 Ganesh Housing are associated (or correlated) with MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of Ganesh Housing i.e., Ganesh Housing and MIRC Electronics go up and down completely randomly.

Pair Corralation between Ganesh Housing and MIRC Electronics

Assuming the 90 days trading horizon Ganesh Housing is expected to generate 1.13 times more return on investment than MIRC Electronics. However, Ganesh Housing is 1.13 times more volatile than MIRC Electronics Limited. It trades about 0.16 of its potential returns per unit of risk. MIRC Electronics Limited is currently generating about -0.02 per unit of risk. If you would invest  87,650  in Ganesh Housing on September 23, 2024 and sell it today you would earn a total of  31,170  from holding Ganesh Housing or generate 35.56% return on investment over 90 days.

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

Ganesh Housing  vs.  MIRC Electronics Limited

Ganesh Housing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MIRC Electronics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ganesh Housing and MIRC Electronics

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

The idea behind Ganesh Housing and MIRC Electronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.