Correlation Between MIRC Electronics and Godawari Power

Can any of the company-specific risk be diversified away by investing in both MIRC Electronics and Godawari Power 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 Godawari Power 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 Godawari Power And, you can compare the effects of market volatilities on MIRC Electronics and Godawari Power 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 Godawari Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRC Electronics and Godawari Power.

Diversification Opportunities for MIRC Electronics and Godawari Power

0.3

Correlation Coefficient

MIRC Electronics  Godawari Power

Weak diversification

The 3 months correlation between MIRC and Godawari is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and Godawari Power And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Godawari Power And 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 Godawari Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Godawari Power And has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and Godawari Power go up and down completely randomly.

Pair Corralation between MIRC Electronics and Godawari Power

Assuming the 90 days trading horizon MIRC Electronics Limited is expected to under-perform the Godawari Power. In addition to that, MIRC Electronics is 1.11 times more volatile than Godawari Power And. It trades about -0.07 of its total potential returns per unit of risk. Godawari Power And is currently generating about 0.15 per unit of volatility. If you would invest  18,821  in Godawari Power And on September 17, 2024 and sell it today you would earn a total of  4,519  from holding Godawari Power And or generate 24.01% return on investment over 90 days.

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

MIRC Electronics Limited  vs.  Godawari Power And

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 latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Godawari Power And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Godawari Power And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Godawari Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRC Electronics and Godawari Power

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

The idea behind MIRC Electronics Limited and Godawari Power 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.