Correlation Between ITI and Automotive Stampings
Can any of the company-specific risk be diversified away by investing in both ITI 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 ITI and Automotive Stampings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITI Limited and Automotive Stampings and, you can compare the effects of market volatilities on ITI 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 ITI with a short position of Automotive Stampings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITI and Automotive Stampings.
Diversification Opportunities for ITI and Automotive Stampings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITI and Automotive is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited 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 ITI 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 ITI Limited 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 ITI i.e., ITI and Automotive Stampings go up and down completely randomly.
Pair Corralation between ITI and Automotive Stampings
Assuming the 90 days trading horizon ITI Limited is expected to generate 3.74 times more return on investment than Automotive Stampings. However, ITI is 3.74 times more volatile than Automotive Stampings and. It trades about 0.15 of its potential returns per unit of risk. Automotive Stampings and is currently generating about -0.29 per unit of risk. If you would invest 37,300 in ITI Limited on October 15, 2024 and sell it today you would earn a total of 6,970 from holding ITI Limited or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITI Limited vs. Automotive Stampings and
Performance |
| Timeline |
| ITI Limited |
| Automotive Stampings and |
ITI and Automotive Stampings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITI and Automotive Stampings
The main advantage of trading using opposite ITI and Automotive Stampings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITI 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.| ITI vs. MRF Limited | ITI vs. Bosch Limited | ITI vs. Bajaj Holdings Investment | ITI vs. Vardhman Holdings Limited |
| Automotive Stampings vs. Hisar Metal Industries | Automotive Stampings vs. Total Transport Systems | Automotive Stampings vs. Rashtriya Chemicals and | Automotive Stampings vs. Krebs Biochemicals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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