Correlation Between Tech Mahindra and Selan Exploration
Can any of the company-specific risk be diversified away by investing in both Tech Mahindra and Selan Exploration 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 Tech Mahindra and Selan Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tech Mahindra Limited and Selan Exploration Technology, you can compare the effects of market volatilities on Tech Mahindra and Selan Exploration 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 Tech Mahindra with a short position of Selan Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tech Mahindra and Selan Exploration.
Diversification Opportunities for Tech Mahindra and Selan Exploration
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tech and Selan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tech Mahindra Limited and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration and Tech Mahindra 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 Tech Mahindra Limited are associated (or correlated) with Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of Tech Mahindra i.e., Tech Mahindra and Selan Exploration go up and down completely randomly.
Pair Corralation between Tech Mahindra and Selan Exploration
Assuming the 90 days trading horizon Tech Mahindra is expected to generate 2.4 times less return on investment than Selan Exploration. But when comparing it to its historical volatility, Tech Mahindra Limited is 1.97 times less risky than Selan Exploration. It trades about 0.08 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 22,990 in Selan Exploration Technology on September 12, 2024 and sell it today you would earn a total of 68,165 from holding Selan Exploration Technology or generate 296.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tech Mahindra Limited vs. Selan Exploration Technology
Performance |
| Timeline |
| Tech Mahindra Limited |
| Selan Exploration |
Tech Mahindra and Selan Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tech Mahindra and Selan Exploration
The main advantage of trading using opposite Tech Mahindra and Selan Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tech Mahindra position performs unexpectedly, Selan Exploration 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 Selan Exploration will offset losses from the drop in Selan Exploration's long position.| Tech Mahindra vs. Steel Authority of | Tech Mahindra vs. NMDC Steel Limited | Tech Mahindra vs. Steelcast Limited | Tech Mahindra vs. MSP Steel Power |
| Selan Exploration vs. India Glycols Limited | Selan Exploration vs. Indo Borax Chemicals | Selan Exploration vs. Kingfa Science Technology | Selan Exploration vs. Alkali Metals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |