Correlation Between Muthoot Finance and Indian Renewable
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By analyzing existing cross correlation between Muthoot Finance Limited and Indian Renewable Energy, you can compare the effects of market volatilities on Muthoot Finance and Indian Renewable 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 Indian Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muthoot Finance and Indian Renewable.
Diversification Opportunities for Muthoot Finance and Indian Renewable
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Muthoot and Indian is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Muthoot Finance Limited and Indian Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Renewable Energy 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 Indian Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Renewable Energy has no effect on the direction of Muthoot Finance i.e., Muthoot Finance and Indian Renewable go up and down completely randomly.
Pair Corralation between Muthoot Finance and Indian Renewable
Assuming the 90 days trading horizon Muthoot Finance Limited is expected to generate 0.82 times more return on investment than Indian Renewable. However, Muthoot Finance Limited is 1.22 times less risky than Indian Renewable. It trades about -0.01 of its potential returns per unit of risk. Indian Renewable Energy is currently generating about -0.04 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. Indian Renewable Energy
Performance |
| Timeline |
| Muthoot Finance |
| Indian Renewable Energy |
Muthoot Finance and Indian Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muthoot Finance and Indian Renewable
The main advantage of trading using opposite Muthoot Finance and Indian Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muthoot Finance position performs unexpectedly, Indian Renewable 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 Indian Renewable will offset losses from the drop in Indian Renewable'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 |
| Indian Renewable vs. Bajaj Finance Limited | Indian Renewable vs. Indian Railway Finance | Indian Renewable vs. Power Finance | Indian Renewable vs. REC Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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