Correlation Between Indian Overseas and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both Indian Overseas and MIC Electronics 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 Overseas and MIC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Overseas Bank and MIC Electronics Limited, you can compare the effects of market volatilities on Indian Overseas and MIC 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 Overseas with a short position of MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Overseas and MIC Electronics.
Diversification Opportunities for Indian Overseas and MIC Electronics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and MIC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Indian Overseas Bank and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics and Indian Overseas 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 Overseas Bank are associated (or correlated) with MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of Indian Overseas i.e., Indian Overseas and MIC Electronics go up and down completely randomly.
Pair Corralation between Indian Overseas and MIC Electronics
Assuming the 90 days trading horizon Indian Overseas Bank is expected to generate 1.05 times more return on investment than MIC Electronics. However, Indian Overseas is 1.05 times more volatile than MIC Electronics Limited. It trades about 0.33 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about 0.1 per unit of risk. If you would invest 4,932 in Indian Overseas Bank on September 14, 2024 and sell it today you would earn a total of 836.00 from holding Indian Overseas Bank or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Overseas Bank vs. MIC Electronics Limited
Performance |
| Timeline |
| Indian Overseas Bank |
| MIC Electronics |
Indian Overseas and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Overseas and MIC Electronics
The main advantage of trading using opposite Indian Overseas and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Overseas position performs unexpectedly, MIC 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| Indian Overseas vs. Ankit Metal Power | Indian Overseas vs. Landmark Cars Limited | Indian Overseas vs. Sarthak Metals Limited | Indian Overseas vs. Hilton Metal Forging |
| MIC Electronics vs. Vodafone Idea Limited | MIC Electronics vs. Yes Bank Limited | MIC Electronics vs. Indian Overseas Bank | MIC Electronics vs. Indian Oil |
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 Stocks Directory module to find actively traded stocks across global markets.
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