Correlation Between Hi Tech and Agarwal Industrial

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Can any of the company-specific risk be diversified away by investing in both Hi Tech and Agarwal Industrial 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 Hi Tech and Agarwal Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Pipes Limited and Agarwal Industrial, you can compare the effects of market volatilities on Hi Tech and Agarwal Industrial 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 Hi Tech with a short position of Agarwal Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Agarwal Industrial.

Diversification Opportunities for Hi Tech and Agarwal Industrial

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between HITECH and Agarwal is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Pipes Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Hi Tech 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 Hi Tech Pipes Limited are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Hi Tech i.e., Hi Tech and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Hi Tech and Agarwal Industrial

Assuming the 90 days trading horizon Hi Tech Pipes Limited is expected to under-perform the Agarwal Industrial. In addition to that, Hi Tech is 1.22 times more volatile than Agarwal Industrial. It trades about -0.21 of its total potential returns per unit of risk. Agarwal Industrial is currently generating about -0.21 per unit of volatility. If you would invest  129,520  in Agarwal Industrial on October 24, 2024 and sell it today you would lose (13,795) from holding Agarwal Industrial or give up 10.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hi Tech Pipes Limited  vs.  Agarwal Industrial

 Performance 
       Timeline  
Hi Tech Pipes 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Agarwal Industrial 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Agarwal Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hi Tech and Agarwal Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hi Tech and Agarwal Industrial

The main advantage of trading using opposite Hi Tech and Agarwal Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, Agarwal Industrial 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 Agarwal Industrial will offset losses from the drop in Agarwal Industrial's long position.
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The idea behind Hi Tech Pipes Limited and Agarwal Industrial 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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