Correlation Between Landmark Cars and Mahamaya Steel

Can any of the company-specific risk be diversified away by investing in both Landmark Cars and Mahamaya Steel 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 Landmark Cars and Mahamaya Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Landmark Cars Limited and Mahamaya Steel Industries, you can compare the effects of market volatilities on Landmark Cars and Mahamaya Steel 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 Landmark Cars with a short position of Mahamaya Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landmark Cars and Mahamaya Steel.

Diversification Opportunities for Landmark Cars and Mahamaya Steel

0.2

Correlation Coefficient

Landmark Cars  Mahamaya Steel

Modest diversification

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

Pair Corralation between Landmark Cars and Mahamaya Steel

Assuming the 90 days trading horizon Landmark Cars Limited is expected to generate 0.98 times more return on investment than Mahamaya Steel. However, Landmark Cars Limited is 1.02 times less risky than Mahamaya Steel. It trades about 0.14 of its potential returns per unit of risk. Mahamaya Steel Industries is currently generating about 0.01 per unit of risk. If you would invest  59,320  in Landmark Cars Limited on September 13, 2024 and sell it today you would earn a total of  9,730  from holding Landmark Cars Limited or generate 16.4% return on investment over 90 days.

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

Landmark Cars Limited  vs.  Mahamaya Steel Industries

Landmark Cars Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Landmark Cars Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Landmark Cars reported solid returns over the last few months and may actually be approaching a breakup point.

Mahamaya Steel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Landmark Cars and Mahamaya Steel

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

The idea behind Landmark Cars Limited and Mahamaya Steel Industries 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.