Correlation Between POWERGRID Infrastructure and Modi Rubber
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By analyzing existing cross correlation between POWERGRID Infrastructure Investment and Modi Rubber Limited, you can compare the effects of market volatilities on POWERGRID Infrastructure and Modi Rubber 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 POWERGRID Infrastructure with a short position of Modi Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and Modi Rubber.
Diversification Opportunities for POWERGRID Infrastructure and Modi Rubber
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between POWERGRID and Modi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Modi Rubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modi Rubber Limited and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Modi Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modi Rubber Limited has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Modi Rubber go up and down completely randomly.
Pair Corralation between POWERGRID Infrastructure and Modi Rubber
Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to under-perform the Modi Rubber. But the stock apears to be less risky and, when comparing its historical volatility, POWERGRID Infrastructure Investment is 3.74 times less risky than Modi Rubber. The stock trades about -0.55 of its potential returns per unit of risk. The Modi Rubber Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10,194 in Modi Rubber Limited on December 13, 2024 and sell it today you would lose (260.00) from holding Modi Rubber Limited or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
POWERGRID Infrastructure Inves vs. Modi Rubber Limited
Performance |
| Timeline |
| POWERGRID Infrastructure |
| Modi Rubber Limited |
POWERGRID Infrastructure and Modi Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWERGRID Infrastructure and Modi Rubber
The main advantage of trading using opposite POWERGRID Infrastructure and Modi Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWERGRID Infrastructure position performs unexpectedly, Modi Rubber 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 Modi Rubber will offset losses from the drop in Modi Rubber's long position.The idea behind POWERGRID Infrastructure Investment and Modi Rubber 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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