Correlation Between Can Fin and 3M India

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Can any of the company-specific risk be diversified away by investing in both Can Fin and 3M India 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 3M India 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 3M India Limited, you can compare the effects of market volatilities on Can Fin and 3M India 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 3M India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Can Fin and 3M India.

Diversification Opportunities for Can Fin and 3M India

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Can and 3MINDIA is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Can Fin Homes and 3M India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M India Limited 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 3M India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M India Limited has no effect on the direction of Can Fin i.e., Can Fin and 3M India go up and down completely randomly.

Pair Corralation between Can Fin and 3M India

Assuming the 90 days trading horizon Can Fin Homes is expected to generate 1.92 times more return on investment than 3M India. However, Can Fin is 1.92 times more volatile than 3M India Limited. It trades about -0.27 of its potential returns per unit of risk. 3M India Limited is currently generating about -0.56 per unit of risk. If you would invest  65,210  in Can Fin Homes on December 1, 2024 and sell it today you would lose (7,445) from holding Can Fin Homes or give up 11.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Can Fin Homes  vs.  3M India Limited

 Performance 
       Timeline  
Can Fin Homes 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
3M India Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days 3M India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Can Fin and 3M India Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Can Fin and 3M India

The main advantage of trading using opposite Can Fin and 3M India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Can Fin position performs unexpectedly, 3M India 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 3M India will offset losses from the drop in 3M India's long position.
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The idea behind Can Fin Homes and 3M India 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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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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