Correlation Between Indian Oil and Automotive Stampings
Can any of the company-specific risk be diversified away by investing in both Indian Oil and Automotive Stampings 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 Oil and Automotive Stampings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Oil and Automotive Stampings and, you can compare the effects of market volatilities on Indian Oil and Automotive Stampings 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 Oil with a short position of Automotive Stampings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Automotive Stampings.
Diversification Opportunities for Indian Oil and Automotive Stampings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and Automotive is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and and Indian Oil 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 Oil are associated (or correlated) with Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of Indian Oil i.e., Indian Oil and Automotive Stampings go up and down completely randomly.
Pair Corralation between Indian Oil and Automotive Stampings
Assuming the 90 days trading horizon Indian Oil is expected to generate 1.14 times less return on investment than Automotive Stampings. But when comparing it to its historical volatility, Indian Oil is 1.51 times less risky than Automotive Stampings. It trades about 0.07 of its potential returns per unit of risk. Automotive Stampings and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 35,990 in Automotive Stampings and on September 26, 2024 and sell it today you would earn a total of 32,410 from holding Automotive Stampings and or generate 90.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Indian Oil vs. Automotive Stampings and
Performance |
| Timeline |
| Indian Oil |
| Automotive Stampings and |
Indian Oil and Automotive Stampings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and Automotive Stampings
The main advantage of trading using opposite Indian Oil and Automotive Stampings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, Automotive Stampings 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 Automotive Stampings will offset losses from the drop in Automotive Stampings' long position.| Indian Oil vs. Lakshmi Finance Industrial | Indian Oil vs. Hilton Metal Forging | Indian Oil vs. Pritish Nandy Communications | Indian Oil vs. Hisar Metal Industries |
| Automotive Stampings vs. Reliance Industries Limited | Automotive Stampings vs. Life Insurance | Automotive Stampings vs. Indian Oil | Automotive Stampings vs. Oil Natural Gas |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |