Correlation Between Indian Metals and MIRC Electronics
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By analyzing existing cross correlation between Indian Metals Ferro and MIRC Electronics Limited, you can compare the effects of market volatilities on Indian Metals and MIRC Electronics 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 Indian Metals with a short position of MIRC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and MIRC Electronics.
Diversification Opportunities for Indian Metals and MIRC Electronics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indian and MIRC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of Indian Metals i.e., Indian Metals and MIRC Electronics go up and down completely randomly.
Pair Corralation between Indian Metals and MIRC Electronics
Assuming the 90 days trading horizon Indian Metals Ferro is expected to generate 1.17 times more return on investment than MIRC Electronics. However, Indian Metals is 1.17 times more volatile than MIRC Electronics Limited. It trades about 0.49 of its potential returns per unit of risk. MIRC Electronics Limited is currently generating about -0.12 per unit of risk. If you would invest 66,364 in Indian Metals Ferro on September 3, 2024 and sell it today you would earn a total of 20,746 from holding Indian Metals Ferro or generate 31.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Indian Metals Ferro vs. MIRC Electronics Limited
Performance |
| Timeline |
| Indian Metals Ferro |
| MIRC Electronics |
Indian Metals and MIRC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Metals and MIRC Electronics
The main advantage of trading using opposite Indian Metals and MIRC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Metals position performs unexpectedly, MIRC Electronics 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 MIRC Electronics will offset losses from the drop in MIRC Electronics' long position.The idea behind Indian Metals Ferro and MIRC Electronics 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.| MIRC Electronics vs. Bajaj Holdings Investment | MIRC Electronics vs. Shipping | MIRC Electronics vs. Indo Borax Chemicals | MIRC Electronics vs. Kingfa Science Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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