Correlation Between Dodla Dairy and Mangalam Organics

Can any of the company-specific risk be diversified away by investing in both Dodla Dairy and Mangalam Organics 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 Dodla Dairy and Mangalam Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dodla Dairy Limited and Mangalam Organics Limited, you can compare the effects of market volatilities on Dodla Dairy and Mangalam Organics 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 Dodla Dairy with a short position of Mangalam Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodla Dairy and Mangalam Organics.

Diversification Opportunities for Dodla Dairy and Mangalam Organics

0.67

Correlation Coefficient

Dodla Dairy  Mangalam Organics

Poor diversification

The 3 months correlation between Dodla and Mangalam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dodla Dairy Limited and Mangalam Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalam Organics and Dodla Dairy 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 Dodla Dairy Limited are associated (or correlated) with Mangalam Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalam Organics has no effect on the direction of Dodla Dairy i.e., Dodla Dairy and Mangalam Organics go up and down completely randomly.

Pair Corralation between Dodla Dairy and Mangalam Organics

Assuming the 90 days trading horizon Dodla Dairy is expected to generate 1.31 times less return on investment than Mangalam Organics. But when comparing it to its historical volatility, Dodla Dairy Limited is 1.4 times less risky than Mangalam Organics. It trades about 0.13 of its potential returns per unit of risk. Mangalam Organics Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  39,120  in Mangalam Organics Limited on April 25, 2025 and sell it today you would earn a total of  9,975  from holding Mangalam Organics Limited or generate 25.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dodla Dairy Limited  vs.  Mangalam Organics Limited

Dodla Dairy Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodla Dairy Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Dodla Dairy displayed solid returns over the last few months and may actually be approaching a breakup point.

Mangalam Organics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mangalam Organics Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mangalam Organics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dodla Dairy and Mangalam Organics

The main advantage of trading using opposite Dodla Dairy and Mangalam Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodla Dairy position performs unexpectedly, Mangalam Organics 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 Mangalam Organics will offset losses from the drop in Mangalam Organics' long position.

The idea behind Dodla Dairy Limited and Mangalam Organics 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.