Correlation Between Indian Metals and Punjab National
Can any of the company-specific risk be diversified away by investing in both Indian Metals and Punjab National 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 Indian Metals and Punjab National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Metals Ferro and Punjab National Bank, you can compare the effects of market volatilities on Indian Metals and Punjab National 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 Punjab National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and Punjab National.
Diversification Opportunities for Indian Metals and Punjab National
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indian and Punjab is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Punjab National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab National Bank 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 Punjab National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab National Bank has no effect on the direction of Indian Metals i.e., Indian Metals and Punjab National go up and down completely randomly.
Pair Corralation between Indian Metals and Punjab National
Assuming the 90 days trading horizon Indian Metals Ferro is expected to under-perform the Punjab National. In addition to that, Indian Metals is 1.67 times more volatile than Punjab National Bank. It trades about -0.24 of its total potential returns per unit of risk. Punjab National Bank is currently generating about -0.04 per unit of volatility. If you would invest 10,174 in Punjab National Bank on November 7, 2024 and sell it today you would lose (269.00) from holding Punjab National Bank or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Metals Ferro vs. Punjab National Bank
Performance |
| Timeline |
| Indian Metals Ferro |
| Punjab National Bank |
Indian Metals and Punjab National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Metals and Punjab National
The main advantage of trading using opposite Indian Metals and Punjab National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Metals position performs unexpectedly, Punjab National 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 Punjab National will offset losses from the drop in Punjab National's long position.| Indian Metals vs. AVALON TECHNOLOGIES LTD | Indian Metals vs. Sintex Plastics Technology | Indian Metals vs. Tera Software Limited | Indian Metals vs. Syrma SGS Technology |
| Punjab National vs. Alkali Metals Limited | Punjab National vs. Lakshmi Finance Industrial | Punjab National vs. Indian Metals Ferro | Punjab National vs. Ratnamani Metals Tubes |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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