Correlation Between Mangalore Chemicals and Blue Coast

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

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

Diversification Opportunities for Mangalore Chemicals and Blue Coast

-0.03

Correlation Coefficient

Mangalore Chemicals  Blue Coast

Good diversification

The 3 months correlation between Mangalore and Blue is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mangalore Chemicals Fertilizer and Blue Coast Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Coast Hotels and Mangalore Chemicals 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 Mangalore Chemicals Fertilizers are associated (or correlated) with Blue Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Coast Hotels has no effect on the direction of Mangalore Chemicals i.e., Mangalore Chemicals and Blue Coast go up and down completely randomly.

Pair Corralation between Mangalore Chemicals and Blue Coast

Assuming the 90 days trading horizon Mangalore Chemicals is expected to generate 1.13 times less return on investment than Blue Coast. In addition to that, Mangalore Chemicals is 1.26 times more volatile than Blue Coast Hotels. It trades about 0.15 of its total potential returns per unit of risk. Blue Coast Hotels is currently generating about 0.21 per unit of volatility. If you would invest  1,052  in Blue Coast Hotels on September 26, 2024 and sell it today you would earn a total of  305.00  from holding Blue Coast Hotels or generate 28.99% return on investment over 90 days.

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

Mangalore Chemicals Fertilizer  vs.  Blue Coast Hotels

Mangalore Chemicals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mangalore Chemicals Fertilizers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mangalore Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Blue Coast Hotels

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Blue Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mangalore Chemicals and Blue Coast

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

The idea behind Mangalore Chemicals Fertilizers and Blue Coast Hotels 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.