Correlation Between Khaitan Chemicals and Manaksia Steels

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Can any of the company-specific risk be diversified away by investing in both Khaitan Chemicals and Manaksia Steels 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 Khaitan Chemicals and Manaksia Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Khaitan Chemicals Fertilizers and Manaksia Steels Limited, you can compare the effects of market volatilities on Khaitan Chemicals and Manaksia Steels 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 Khaitan Chemicals with a short position of Manaksia Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khaitan Chemicals and Manaksia Steels.

Diversification Opportunities for Khaitan Chemicals and Manaksia Steels

KhaitanManaksiaDiversified AwayKhaitanManaksiaDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Khaitan and Manaksia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Khaitan Chemicals Fertilizers and Manaksia Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Steels and Khaitan Chemicals 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 Khaitan Chemicals Fertilizers are associated (or correlated) with Manaksia Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Steels has no effect on the direction of Khaitan Chemicals i.e., Khaitan Chemicals and Manaksia Steels go up and down completely randomly.

Pair Corralation between Khaitan Chemicals and Manaksia Steels

Assuming the 90 days trading horizon Khaitan Chemicals Fertilizers is expected to under-perform the Manaksia Steels. In addition to that, Khaitan Chemicals is 1.13 times more volatile than Manaksia Steels Limited. It trades about -0.11 of its total potential returns per unit of risk. Manaksia Steels Limited is currently generating about -0.07 per unit of volatility. If you would invest  6,767  in Manaksia Steels Limited on November 23, 2024 and sell it today you would lose (1,440) from holding Manaksia Steels Limited or give up 21.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Khaitan Chemicals Fertilizers  vs.  Manaksia Steels Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15KHAICHEM MANAKSTEEL
       Timeline  
Khaitan Chemicals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Khaitan Chemicals Fertilizers 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 technical indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb556065707580
Manaksia Steels 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Manaksia Steels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb50556065

Khaitan Chemicals and Manaksia Steels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.48-4.11-2.73-1.35-0.02171.262.573.875.176.48 0.0300.0350.0400.0450.0500.055
JavaScript chart by amCharts 3.21.15KHAICHEM MANAKSTEEL
       Returns  

Pair Trading with Khaitan Chemicals and Manaksia Steels

The main advantage of trading using opposite Khaitan Chemicals and Manaksia Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Khaitan Chemicals position performs unexpectedly, Manaksia Steels 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 Manaksia Steels will offset losses from the drop in Manaksia Steels' long position.
The idea behind Khaitan Chemicals Fertilizers and Manaksia Steels Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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