Correlation Between Meghmani Organics and HT Media

Can any of the company-specific risk be diversified away by investing in both Meghmani Organics and HT Media 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 Meghmani Organics and HT Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Meghmani Organics and HT Media

0.6

Correlation Coefficient

Meghmani Organics  HT Media

Poor diversification

The 3 months correlation between Meghmani and HTMEDIA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Meghmani Organics Limited and HT Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HT Media Limited and Meghmani Organics 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 Meghmani Organics Limited are associated (or correlated) with HT Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HT Media Limited has no effect on the direction of Meghmani Organics i.e., Meghmani Organics and HT Media go up and down completely randomly.

Pair Corralation between Meghmani Organics and HT Media

Assuming the 90 days trading horizon Meghmani Organics Limited is expected to under-perform the HT Media. But the stock apears to be less risky and, when comparing its historical volatility, Meghmani Organics Limited is 1.09 times less risky than HT Media. The stock trades about -0.08 of its potential returns per unit of risk. The HT Media Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,398  in HT Media Limited on September 20, 2024 and sell it today you would earn a total of  90.00  from holding HT Media Limited or generate 3.75% return on investment over 90 days.

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

Meghmani Organics Limited  vs.  HT Media Limited

Meghmani Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meghmani Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and 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.

HT Media Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HT Media Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HT Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Meghmani Organics and HT Media

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

The idea behind Meghmani Organics Limited and HT Media Limited 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.