Correlation Between Styrenix Performance and Mazagon Dock

Can any of the company-specific risk be diversified away by investing in both Styrenix Performance and Mazagon Dock 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 Styrenix Performance and Mazagon Dock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Styrenix Performance Materials and Mazagon Dock Shipbuilders, you can compare the effects of market volatilities on Styrenix Performance and Mazagon Dock 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 Styrenix Performance with a short position of Mazagon Dock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Styrenix Performance and Mazagon Dock.

Diversification Opportunities for Styrenix Performance and Mazagon Dock

0.78

Correlation Coefficient

Styrenix Performance  Mazagon Dock

Poor diversification

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

Pair Corralation between Styrenix Performance and Mazagon Dock

Assuming the 90 days trading horizon Styrenix Performance Materials is expected to generate 0.73 times more return on investment than Mazagon Dock. However, Styrenix Performance Materials is 1.38 times less risky than Mazagon Dock. It trades about 0.13 of its potential returns per unit of risk. Mazagon Dock Shipbuilders is currently generating about 0.06 per unit of risk. If you would invest  251,523  in Styrenix Performance Materials on September 23, 2024 and sell it today you would earn a total of  47,042  from holding Styrenix Performance Materials or generate 18.7% return on investment over 90 days.

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

Styrenix Performance Materials  vs.  Mazagon Dock Shipbuilders

Styrenix Performance

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Styrenix Performance Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mazagon Dock Shipbuilders

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mazagon Dock Shipbuilders are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Mazagon Dock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Styrenix Performance and Mazagon Dock

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

The idea behind Styrenix Performance Materials and Mazagon Dock Shipbuilders 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.