Correlation Between Muthoot Finance and Bajaj Finance
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By analyzing existing cross correlation between Muthoot Finance Limited and Bajaj Finance Limited, you can compare the effects of market volatilities on Muthoot Finance and Bajaj Finance 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 Muthoot Finance with a short position of Bajaj Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muthoot Finance and Bajaj Finance.
Diversification Opportunities for Muthoot Finance and Bajaj Finance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Muthoot and Bajaj is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Muthoot Finance Limited and Bajaj Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Finance Limited and Muthoot Finance 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 Muthoot Finance Limited are associated (or correlated) with Bajaj Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Finance Limited has no effect on the direction of Muthoot Finance i.e., Muthoot Finance and Bajaj Finance go up and down completely randomly.
Pair Corralation between Muthoot Finance and Bajaj Finance
Assuming the 90 days trading horizon Muthoot Finance Limited is expected to generate 1.31 times more return on investment than Bajaj Finance. However, Muthoot Finance is 1.31 times more volatile than Bajaj Finance Limited. It trades about -0.01 of its potential returns per unit of risk. Bajaj Finance Limited is currently generating about -0.16 per unit of risk. If you would invest 193,145 in Muthoot Finance Limited on September 2, 2024 and sell it today you would lose (1,440) from holding Muthoot Finance Limited or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Muthoot Finance Limited vs. Bajaj Finance Limited
Performance |
| Timeline |
| Muthoot Finance |
| Bajaj Finance Limited |
Muthoot Finance and Bajaj Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muthoot Finance and Bajaj Finance
The main advantage of trading using opposite Muthoot Finance and Bajaj Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muthoot Finance position performs unexpectedly, Bajaj Finance 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 Bajaj Finance will offset losses from the drop in Bajaj Finance's long position.| Muthoot Finance vs. Tata Communications Limited | Muthoot Finance vs. Ortel Communications Limited | Muthoot Finance vs. Tamilnadu Telecommunication Limited | Muthoot Finance vs. Syrma SGS Technology |
| Bajaj Finance vs. NMDC Steel Limited | Bajaj Finance vs. Univa Foods Limited | Bajaj Finance vs. ADF Foods Limited | Bajaj Finance vs. Vraj Iron 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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