Correlation Between V Mart and STEEL EXCHANGE

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

Diversification Opportunities for V Mart and STEEL EXCHANGE

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between VMART and STEEL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and STEEL EXCHANGE INDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL EXCHANGE INDIA and V Mart 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 V Mart Retail Limited are associated (or correlated) with STEEL EXCHANGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL EXCHANGE INDIA has no effect on the direction of V Mart i.e., V Mart and STEEL EXCHANGE go up and down completely randomly.

Pair Corralation between V Mart and STEEL EXCHANGE

Assuming the 90 days trading horizon V Mart Retail Limited is expected to under-perform the STEEL EXCHANGE. In addition to that, V Mart is 1.08 times more volatile than STEEL EXCHANGE INDIA. It trades about -0.3 of its total potential returns per unit of risk. STEEL EXCHANGE INDIA is currently generating about -0.23 per unit of volatility. If you would invest  1,114  in STEEL EXCHANGE INDIA on October 12, 2024 and sell it today you would lose (95.00) from holding STEEL EXCHANGE INDIA or give up 8.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

V Mart Retail Limited  vs.  STEEL EXCHANGE INDIA

 Performance 
       Timeline  
V Mart Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
STEEL EXCHANGE INDIA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STEEL EXCHANGE INDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

V Mart and STEEL EXCHANGE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with V Mart and STEEL EXCHANGE

The main advantage of trading using opposite V Mart and STEEL EXCHANGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V Mart position performs unexpectedly, STEEL EXCHANGE 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 STEEL EXCHANGE will offset losses from the drop in STEEL EXCHANGE's long position.
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The idea behind V Mart Retail Limited and STEEL EXCHANGE INDIA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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