Correlation Between MIRC Electronics and Ganesh Housing

Can any of the company-specific risk be diversified away by investing in both MIRC Electronics and Ganesh Housing 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 MIRC Electronics and Ganesh Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for MIRC Electronics and Ganesh Housing

-0.34

Correlation Coefficient

MIRC Electronics  Ganesh Housing

Very good diversification

The 3 months correlation between MIRC and Ganesh is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and Ganesh Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganesh Housing and MIRC Electronics 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 MIRC Electronics Limited are associated (or correlated) with Ganesh Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganesh Housing has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and Ganesh Housing go up and down completely randomly.

Pair Corralation between MIRC Electronics and Ganesh Housing

Assuming the 90 days trading horizon MIRC Electronics is expected to generate 1.46 times less return on investment than Ganesh Housing. In addition to that, MIRC Electronics is 1.03 times more volatile than Ganesh Housing. It trades about 0.11 of its total potential returns per unit of risk. Ganesh Housing is currently generating about 0.16 per unit of volatility. If you would invest  98,830  in Ganesh Housing on September 23, 2024 and sell it today you would earn a total of  19,990  from holding Ganesh Housing or generate 20.23% return on investment over 90 days.

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

MIRC Electronics Limited  vs.  Ganesh Housing

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ganesh Housing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRC Electronics and Ganesh Housing

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

The idea behind MIRC Electronics Limited and Ganesh Housing 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.