Correlation Between Indraprastha Medical and TECIL Chemicals

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

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

Diversification Opportunities for Indraprastha Medical and TECIL Chemicals

-0.2

Correlation Coefficient

Indraprastha Medical  TECIL Chemicals

Good diversification

The 3 months correlation between Indraprastha and TECIL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Indraprastha Medical and TECIL Chemicals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECIL Chemicals and Indraprastha Medical 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 Indraprastha Medical are associated (or correlated) with TECIL Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECIL Chemicals has no effect on the direction of Indraprastha Medical i.e., Indraprastha Medical and TECIL Chemicals go up and down completely randomly.

Pair Corralation between Indraprastha Medical and TECIL Chemicals

Assuming the 90 days trading horizon Indraprastha Medical is expected to generate 1.66 times more return on investment than TECIL Chemicals. However, Indraprastha Medical is 1.66 times more volatile than TECIL Chemicals and. It trades about 0.26 of its potential returns per unit of risk. TECIL Chemicals and is currently generating about -0.04 per unit of risk. If you would invest  43,125  in Indraprastha Medical on September 27, 2024 and sell it today you would earn a total of  6,330  from holding Indraprastha Medical or generate 14.68% return on investment over 90 days.

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

Indraprastha Medical  vs.  TECIL Chemicals and

Indraprastha Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Indraprastha Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

TECIL Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TECIL Chemicals and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, TECIL Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Indraprastha Medical and TECIL Chemicals

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

The idea behind Indraprastha Medical and TECIL Chemicals and 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.