Correlation Between Electrosteel Castings and Hisar Metal

Can any of the company-specific risk be diversified away by investing in both Electrosteel Castings and Hisar Metal 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 Electrosteel Castings and Hisar Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrosteel Castings Limited and Hisar Metal Industries, you can compare the effects of market volatilities on Electrosteel Castings and Hisar Metal 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 Electrosteel Castings with a short position of Hisar Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrosteel Castings and Hisar Metal.

Diversification Opportunities for Electrosteel Castings and Hisar Metal

0.16

Correlation Coefficient

Electrosteel Castings  Hisar Metal

Average diversification

The 3 months correlation between Electrosteel and Hisar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Electrosteel Castings Limited and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal Industries and Electrosteel Castings 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 Electrosteel Castings Limited are associated (or correlated) with Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of Electrosteel Castings i.e., Electrosteel Castings and Hisar Metal go up and down completely randomly.

Pair Corralation between Electrosteel Castings and Hisar Metal

Assuming the 90 days trading horizon Electrosteel Castings Limited is expected to generate 1.52 times more return on investment than Hisar Metal. However, Electrosteel Castings is 1.52 times more volatile than Hisar Metal Industries. It trades about 0.06 of its potential returns per unit of risk. Hisar Metal Industries is currently generating about 0.07 per unit of risk. If you would invest  10,368  in Electrosteel Castings Limited on April 25, 2025 and sell it today you would earn a total of  1,032  from holding Electrosteel Castings Limited or generate 9.95% return on investment over 90 days.

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

Electrosteel Castings Limited  vs.  Hisar Metal Industries

Electrosteel Castings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrosteel Castings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrosteel Castings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hisar Metal Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Hisar Metal may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Electrosteel Castings and Hisar Metal

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

The idea behind Electrosteel Castings Limited and Hisar Metal Industries 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.