Correlation Between Power Finance and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both Power Finance and MIC Electronics 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 Power Finance and MIC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Finance and MIC Electronics Limited, you can compare the effects of market volatilities on Power Finance and MIC Electronics 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 Power Finance with a short position of MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and MIC Electronics.
Diversification Opportunities for Power Finance and MIC Electronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and MIC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics and Power 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 Power Finance are associated (or correlated) with MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of Power Finance i.e., Power Finance and MIC Electronics go up and down completely randomly.
Pair Corralation between Power Finance and MIC Electronics
Assuming the 90 days trading horizon Power Finance is expected to generate 1.08 times more return on investment than MIC Electronics. However, Power Finance is 1.08 times more volatile than MIC Electronics Limited. It trades about 0.1 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about -0.02 per unit of risk. If you would invest 45,310 in Power Finance on August 25, 2024 and sell it today you would earn a total of 2,485 from holding Power Finance or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Power Finance vs. MIC Electronics Limited
Performance |
| Timeline |
| Power Finance |
| MIC Electronics |
Power Finance and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Finance and MIC Electronics
The main advantage of trading using opposite Power Finance and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Finance position performs unexpectedly, MIC Electronics 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| Power Finance vs. Viceroy Hotels Limited | Power Finance vs. Blue Jet Healthcare | Power Finance vs. TTK Healthcare Limited | Power Finance vs. Allied Blenders Distillers |
| MIC Electronics vs. Life Insurance | MIC Electronics vs. Power Finance | MIC Electronics vs. HDFC Bank Limited | MIC Electronics vs. State Bank of |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |