Correlation Between Electrosteel Castings and Motilal Oswal
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By analyzing existing cross correlation between Electrosteel Castings Limited and Motilal Oswal Financial, you can compare the effects of market volatilities on Electrosteel Castings and Motilal Oswal 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 Electrosteel Castings with a short position of Motilal Oswal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrosteel Castings and Motilal Oswal.
Diversification Opportunities for Electrosteel Castings and Motilal Oswal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electrosteel and Motilal is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Electrosteel Castings Limited and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial and Electrosteel Castings 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 Electrosteel Castings Limited are associated (or correlated) with Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of Electrosteel Castings i.e., Electrosteel Castings and Motilal Oswal go up and down completely randomly.
Pair Corralation between Electrosteel Castings and Motilal Oswal
Assuming the 90 days trading horizon Electrosteel Castings is expected to generate 5.96 times less return on investment than Motilal Oswal. But when comparing it to its historical volatility, Electrosteel Castings Limited is 7.86 times less risky than Motilal Oswal. It trades about 0.1 of its potential returns per unit of risk. Motilal Oswal Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,870 in Motilal Oswal Financial on October 16, 2024 and sell it today you would earn a total of 72,585 from holding Motilal Oswal Financial or generate 430.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electrosteel Castings Limited vs. Motilal Oswal Financial
Performance |
| Timeline |
| Electrosteel Castings |
| Motilal Oswal Financial |
Electrosteel Castings and Motilal Oswal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electrosteel Castings and Motilal Oswal
The main advantage of trading using opposite Electrosteel Castings and Motilal Oswal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrosteel Castings position performs unexpectedly, Motilal Oswal 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 Motilal Oswal will offset losses from the drop in Motilal Oswal's long position.The idea behind Electrosteel Castings Limited and Motilal Oswal Financial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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