Correlation Between Infomedia Press and Manaksia Steels

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

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

Diversification Opportunities for Infomedia Press and Manaksia Steels

0.62

Correlation Coefficient

Infomedia Press  Manaksia Steels

Poor diversification

The 3 months correlation between Infomedia and Manaksia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and Manaksia Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Steels and Infomedia Press 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 Infomedia Press Limited are associated (or correlated) with Manaksia Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Steels has no effect on the direction of Infomedia Press i.e., Infomedia Press and Manaksia Steels go up and down completely randomly.

Pair Corralation between Infomedia Press and Manaksia Steels

Assuming the 90 days trading horizon Infomedia Press Limited is expected to under-perform the Manaksia Steels. In addition to that, Infomedia Press is 1.08 times more volatile than Manaksia Steels Limited. It trades about -0.03 of its total potential returns per unit of risk. Manaksia Steels Limited is currently generating about 0.08 per unit of volatility. If you would invest  5,547  in Manaksia Steels Limited on September 1, 2024 and sell it today you would earn a total of  705.00  from holding Manaksia Steels Limited or generate 12.71% return on investment over 90 days.

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

Infomedia Press Limited  vs.  Manaksia Steels Limited

Infomedia Press

Risk-Adjusted Performance

0 of 100

Very Weak

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

Manaksia Steels

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Infomedia Press and Manaksia Steels

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

The idea behind Infomedia Press Limited and Manaksia Steels 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..