Correlation Between Amber Enterprises and MRF
Can any of the company-specific risk be diversified away by investing in both Amber Enterprises and MRF 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 Amber Enterprises and MRF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amber Enterprises India and MRF Limited, you can compare the effects of market volatilities on Amber Enterprises and MRF 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 Amber Enterprises with a short position of MRF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amber Enterprises and MRF.
Diversification Opportunities for Amber Enterprises and MRF
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amber and MRF is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amber Enterprises India and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited and Amber Enterprises 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 Amber Enterprises India are associated (or correlated) with MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Amber Enterprises i.e., Amber Enterprises and MRF go up and down completely randomly.
Pair Corralation between Amber Enterprises and MRF
Assuming the 90 days trading horizon Amber Enterprises is expected to generate 3.78 times less return on investment than MRF. In addition to that, Amber Enterprises is 2.17 times more volatile than MRF Limited. It trades about 0.02 of its total potential returns per unit of risk. MRF Limited is currently generating about 0.17 per unit of volatility. If you would invest 12,087,700 in MRF Limited on September 5, 2024 and sell it today you would earn a total of 470,800 from holding MRF Limited or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amber Enterprises India vs. MRF Limited
Performance |
| Timeline |
| Amber Enterprises India |
| MRF Limited |
Amber Enterprises and MRF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amber Enterprises and MRF
The main advantage of trading using opposite Amber Enterprises and MRF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amber Enterprises position performs unexpectedly, MRF 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 MRF will offset losses from the drop in MRF's long position.| Amber Enterprises vs. MRF Limited | Amber Enterprises vs. JSW Holdings Limited | Amber Enterprises vs. Maharashtra Scooters Limited | Amber Enterprises vs. Nalwa Sons Investments |
| MRF vs. General Insurance | MRF vs. Cantabil Retail India | MRF vs. Sri Havisha Hospitality | MRF vs. The Byke Hospitality |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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