Correlation Between Hindustan Copper and Geojit Financial

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

By analyzing existing cross correlation between Hindustan Copper Limited and Geojit Financial Services, you can compare the effects of market volatilities on Hindustan Copper and Geojit Financial 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 Hindustan Copper with a short position of Geojit Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hindustan Copper and Geojit Financial.

Diversification Opportunities for Hindustan Copper and Geojit Financial

0.7

Correlation Coefficient

Hindustan Copper  Geojit Financial

Poor diversification

The 3 months correlation between Hindustan and Geojit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Copper Limited and Geojit Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geojit Financial Services and Hindustan Copper 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 Hindustan Copper Limited are associated (or correlated) with Geojit Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geojit Financial Services has no effect on the direction of Hindustan Copper i.e., Hindustan Copper and Geojit Financial go up and down completely randomly.

Pair Corralation between Hindustan Copper and Geojit Financial

Assuming the 90 days trading horizon Hindustan Copper Limited is expected to under-perform the Geojit Financial. But the stock apears to be less risky and, when comparing its historical volatility, Hindustan Copper Limited is 2.04 times less risky than Geojit Financial. The stock trades about -0.1 of its potential returns per unit of risk. The Geojit Financial Services is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13,590  in Geojit Financial Services on August 31, 2024 and sell it today you would lose (1,472) from holding Geojit Financial Services or give up 10.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Hindustan Copper Limited  vs.  Geojit Financial Services

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Geojit Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geojit Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Geojit Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hindustan Copper and Geojit Financial

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

The idea behind Hindustan Copper Limited and Geojit Financial Services 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.