Correlation Between Power Finance and Hindware Home

Can any of the company-specific risk be diversified away by investing in both Power Finance and Hindware Home 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 Power Finance and Hindware Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Finance and Hindware Home Innovation, you can compare the effects of market volatilities on Power Finance and Hindware Home 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 Power Finance with a short position of Hindware Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and Hindware Home.

Diversification Opportunities for Power Finance and Hindware Home

0.78

Correlation Coefficient

Power Finance  Hindware Home

Poor diversification

The 3 months correlation between Power and Hindware is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and Hindware Home Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindware Home Innovation and Power Finance 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 Power Finance are associated (or correlated) with Hindware Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindware Home Innovation has no effect on the direction of Power Finance i.e., Power Finance and Hindware Home go up and down completely randomly.

Pair Corralation between Power Finance and Hindware Home

Assuming the 90 days trading horizon Power Finance is expected to generate 0.88 times more return on investment than Hindware Home. However, Power Finance is 1.14 times less risky than Hindware Home. It trades about -0.05 of its potential returns per unit of risk. Hindware Home Innovation is currently generating about -0.1 per unit of risk. If you would invest  54,314  in Power Finance on August 31, 2024 and sell it today you would lose (4,914) from holding Power Finance or give up 9.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Power Finance  vs.  Hindware Home Innovation

Power Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hindware Home Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindware Home Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Power Finance and Hindware Home

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

The idea behind Power Finance and Hindware Home Innovation 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.