Correlation Between Indian Railway and REC
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By analyzing existing cross correlation between Indian Railway Finance and REC Limited, you can compare the effects of market volatilities on Indian Railway and REC 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 Railway with a short position of REC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Railway and REC.
Diversification Opportunities for Indian Railway and REC
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Indian and REC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Indian Railway Finance and REC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Limited and Indian Railway 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 Railway Finance are associated (or correlated) with REC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Limited has no effect on the direction of Indian Railway i.e., Indian Railway and REC go up and down completely randomly.
Pair Corralation between Indian Railway and REC
Assuming the 90 days trading horizon Indian Railway Finance is expected to generate 0.86 times more return on investment than REC. However, Indian Railway Finance is 1.16 times less risky than REC. It trades about -0.15 of its potential returns per unit of risk. REC Limited is currently generating about -0.13 per unit of risk. If you would invest 13,705 in Indian Railway Finance on November 28, 2024 and sell it today you would lose (1,379) from holding Indian Railway Finance or give up 10.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Railway Finance vs. REC Limited
Performance |
| Timeline |
| Indian Railway Finance |
| REC Limited |
Indian Railway and REC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Railway and REC
The main advantage of trading using opposite Indian Railway and REC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Railway position performs unexpectedly, REC 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 REC will offset losses from the drop in REC's long position.| Indian Railway vs. ILFS Investment Managers | Indian Railway vs. Sri Havisha Hospitality | Indian Railway vs. Ventive Hospitality | Indian Railway vs. SANOFI S HEALTHC |
| REC vs. Dharani SugarsChemicals Limited | REC vs. IOL Chemicals and | REC vs. Chambal Fertilizers Chemicals | REC vs. TECIL Chemicals and |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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