Correlation Between Can Fin and Ratnamani Metals

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

By analyzing existing cross correlation between Can Fin Homes and Ratnamani Metals Tubes, you can compare the effects of market volatilities on Can Fin and Ratnamani Metals 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 Can Fin with a short position of Ratnamani Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Can Fin and Ratnamani Metals.

Diversification Opportunities for Can Fin and Ratnamani Metals

0.65

Correlation Coefficient

Can Fin  Ratnamani Metals

Poor diversification

The 3 months correlation between Can and Ratnamani is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Can Fin Homes and Ratnamani Metals Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratnamani Metals Tubes and Can Fin 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 Can Fin Homes are associated (or correlated) with Ratnamani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratnamani Metals Tubes has no effect on the direction of Can Fin i.e., Can Fin and Ratnamani Metals go up and down completely randomly.

Pair Corralation between Can Fin and Ratnamani Metals

Assuming the 90 days trading horizon Can Fin is expected to generate 1.27 times less return on investment than Ratnamani Metals. In addition to that, Can Fin is 1.04 times more volatile than Ratnamani Metals Tubes. It trades about 0.05 of its total potential returns per unit of risk. Ratnamani Metals Tubes is currently generating about 0.07 per unit of volatility. If you would invest  194,700  in Ratnamani Metals Tubes on August 27, 2024 and sell it today you would earn a total of  151,925  from holding Ratnamani Metals Tubes or generate 78.03% return on investment over 90 days.

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

Can Fin Homes  vs.  Ratnamani Metals Tubes

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Can Fin is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ratnamani Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Can Fin and Ratnamani Metals

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

The idea behind Can Fin Homes and Ratnamani Metals Tubes 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.