Correlation Between Indian Oil and Hathway Cable

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Can any of the company-specific risk be diversified away by investing in both Indian Oil and Hathway Cable 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 Hathway Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Oil and Hathway Cable Datacom, you can compare the effects of market volatilities on Indian Oil and Hathway Cable 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 Hathway Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Hathway Cable.

Diversification Opportunities for Indian Oil and Hathway Cable

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Indian and Hathway is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and Hathway Cable Datacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hathway Cable Datacom 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 Hathway Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hathway Cable Datacom has no effect on the direction of Indian Oil i.e., Indian Oil and Hathway Cable go up and down completely randomly.

Pair Corralation between Indian Oil and Hathway Cable

Assuming the 90 days trading horizon Indian Oil is expected to generate 0.8 times more return on investment than Hathway Cable. However, Indian Oil is 1.24 times less risky than Hathway Cable. It trades about -0.13 of its potential returns per unit of risk. Hathway Cable Datacom is currently generating about -0.24 per unit of risk. If you would invest  14,549  in Indian Oil on September 2, 2024 and sell it today you would lose (686.00) from holding Indian Oil or give up 4.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Indian Oil  vs.  Hathway Cable Datacom

 Performance 
       Timeline  
Indian Oil 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Indian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Hathway Cable Datacom 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hathway Cable Datacom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indian Oil and Hathway Cable Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Indian Oil and Hathway Cable

The main advantage of trading using opposite Indian Oil and Hathway Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, Hathway Cable 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 Hathway Cable will offset losses from the drop in Hathway Cable's long position.
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The idea behind Indian Oil and Hathway Cable Datacom 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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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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