Correlation Between Consolidated Construction and Indian Oil
Can any of the company-specific risk be diversified away by investing in both Consolidated Construction and Indian Oil 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 Consolidated Construction and Indian Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Construction Consortium and Indian Oil, you can compare the effects of market volatilities on Consolidated Construction and Indian Oil 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 Consolidated Construction with a short position of Indian Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Indian Oil.
Diversification Opportunities for Consolidated Construction and Indian Oil
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consolidated and Indian is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Indian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Oil and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with Indian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Oil has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and Indian Oil go up and down completely randomly.
Pair Corralation between Consolidated Construction and Indian Oil
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 2.09 times more return on investment than Indian Oil. However, Consolidated Construction is 2.09 times more volatile than Indian Oil. It trades about 0.05 of its potential returns per unit of risk. Indian Oil is currently generating about -0.13 per unit of risk. If you would invest 1,844 in Consolidated Construction Consortium on September 2, 2024 and sell it today you would earn a total of 51.00 from holding Consolidated Construction Consortium or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Consolidated Construction Cons vs. Indian Oil
Performance |
| Timeline |
| Consolidated Construction |
| Indian Oil |
Consolidated Construction and Indian Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and Indian Oil
The main advantage of trading using opposite Consolidated Construction and Indian Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, Indian Oil 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 Indian Oil will offset losses from the drop in Indian Oil's long position.The idea behind Consolidated Construction Consortium and Indian Oil 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.
| Indian Oil vs. Healthcare Global Enterprises | Indian Oil vs. Iris Clothings Limited | Indian Oil vs. Kewal Kiran Clothing | Indian Oil vs. Entero Healthcare Solutions |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |