Correlation Between MIRC Electronics and Motilal Oswal

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

Diversification Opportunities for MIRC Electronics and Motilal Oswal

-0.73

Correlation Coefficient

MIRC Electronics  Motilal Oswal

Pay attention - limited upside

The 3 months correlation between MIRC and Motilal is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial 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 Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and Motilal Oswal go up and down completely randomly.

Pair Corralation between MIRC Electronics and Motilal Oswal

Assuming the 90 days trading horizon MIRC Electronics is expected to generate 13.83 times less return on investment than Motilal Oswal. But when comparing it to its historical volatility, MIRC Electronics Limited is 6.49 times less risky than Motilal Oswal. It trades about 0.03 of its potential returns per unit of risk. Motilal Oswal Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16,063  in Motilal Oswal Financial on September 3, 2024 and sell it today you would earn a total of  75,862  from holding Motilal Oswal Financial or generate 472.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

MIRC Electronics Limited  vs.  Motilal Oswal Financial

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 conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Motilal Oswal Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRC Electronics and Motilal Oswal

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

The idea behind MIRC Electronics Limited and Motilal Oswal Financial 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.