Correlation Between Plastiblends India and Chemcon Speciality

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

Diversification Opportunities for Plastiblends India and Chemcon Speciality

PlastiblendsChemconDiversified AwayPlastiblendsChemconDiversified Away100%
0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Plastiblends and Chemcon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Plastiblends India Limited and Chemcon Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemcon Speciality and Plastiblends India 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 Plastiblends India Limited are associated (or correlated) with Chemcon Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemcon Speciality has no effect on the direction of Plastiblends India i.e., Plastiblends India and Chemcon Speciality go up and down completely randomly.

Pair Corralation between Plastiblends India and Chemcon Speciality

Assuming the 90 days trading horizon Plastiblends India Limited is expected to under-perform the Chemcon Speciality. But the stock apears to be less risky and, when comparing its historical volatility, Plastiblends India Limited is 1.0 times less risky than Chemcon Speciality. The stock trades about -0.14 of its potential returns per unit of risk. The Chemcon Speciality Chemicals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  21,295  in Chemcon Speciality Chemicals on November 25, 2024 and sell it today you would lose (728.00) from holding Chemcon Speciality Chemicals or give up 3.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Plastiblends India Limited  vs.  Chemcon Speciality Chemicals

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15PLASTIBLEN CHEMCON
       Timeline  
Plastiblends India 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Plastiblends India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb200210220230240250260270280
Chemcon Speciality 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Chemcon Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb200210220230240

Plastiblends India and Chemcon Speciality Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.29-3.24-2.18-1.13-0.07150.91.862.833.794.76 0.050.060.070.080.09
JavaScript chart by amCharts 3.21.15PLASTIBLEN CHEMCON
       Returns  

Pair Trading with Plastiblends India and Chemcon Speciality

The main advantage of trading using opposite Plastiblends India and Chemcon Speciality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastiblends India position performs unexpectedly, Chemcon Speciality 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 Chemcon Speciality will offset losses from the drop in Chemcon Speciality's long position.
The idea behind Plastiblends India Limited and Chemcon Speciality Chemicals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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