Correlation Between REC and Muthoot Finance
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By analyzing existing cross correlation between REC Limited and Muthoot Finance Limited, you can compare the effects of market volatilities on REC and Muthoot 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 REC with a short position of Muthoot Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC and Muthoot Finance.
Diversification Opportunities for REC and Muthoot Finance
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REC and Muthoot is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding REC Limited and Muthoot Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muthoot Finance and REC 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 REC Limited are associated (or correlated) with Muthoot Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muthoot Finance has no effect on the direction of REC i.e., REC and Muthoot Finance go up and down completely randomly.
Pair Corralation between REC and Muthoot Finance
Assuming the 90 days trading horizon REC Limited is expected to generate 1.12 times more return on investment than Muthoot Finance. However, REC is 1.12 times more volatile than Muthoot Finance Limited. It trades about 0.04 of its potential returns per unit of risk. Muthoot Finance Limited is currently generating about -0.01 per unit of risk. If you would invest 52,680 in REC Limited on September 2, 2024 and sell it today you would earn a total of 580.00 from holding REC Limited or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Limited vs. Muthoot Finance Limited
Performance |
| Timeline |
| REC Limited |
| Muthoot Finance |
REC and Muthoot Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC and Muthoot Finance
The main advantage of trading using opposite REC and Muthoot Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC position performs unexpectedly, Muthoot 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 Muthoot Finance will offset losses from the drop in Muthoot Finance's long position.| REC vs. Tata Investment | REC vs. Kalyani Investment | REC vs. Popular Vehicles and | REC vs. Tamilnadu Telecommunication Limited |
| Muthoot Finance vs. Tata Communications Limited | Muthoot Finance vs. Ortel Communications Limited | Muthoot Finance vs. Tamilnadu Telecommunication Limited | Muthoot Finance vs. Syrma SGS Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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