Correlation Between HCL Technologies and Orissa Minerals

Can any of the company-specific risk be diversified away by investing in both HCL Technologies and Orissa Minerals 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 HCL Technologies and Orissa Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HCL Technologies Limited and The Orissa Minerals, you can compare the effects of market volatilities on HCL Technologies and Orissa Minerals 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 HCL Technologies with a short position of Orissa Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCL Technologies and Orissa Minerals.

Diversification Opportunities for HCL Technologies and Orissa Minerals

-0.3

Correlation Coefficient

HCL Technologies  Orissa Minerals

Very good diversification

The 3 months correlation between HCL and Orissa is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HCL Technologies Limited and The Orissa Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orissa Minerals and HCL Technologies 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 HCL Technologies Limited are associated (or correlated) with Orissa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orissa Minerals has no effect on the direction of HCL Technologies i.e., HCL Technologies and Orissa Minerals go up and down completely randomly.

Pair Corralation between HCL Technologies and Orissa Minerals

Assuming the 90 days trading horizon HCL Technologies Limited is expected to under-perform the Orissa Minerals. But the stock apears to be less risky and, when comparing its historical volatility, HCL Technologies Limited is 2.43 times less risky than Orissa Minerals. The stock trades about -0.47 of its potential returns per unit of risk. The The Orissa Minerals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  478,650  in The Orissa Minerals on April 24, 2025 and sell it today you would earn a total of  45,550  from holding The Orissa Minerals or generate 9.52% return on investment over 90 days.

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

HCL Technologies Limited  vs.  The Orissa Minerals

HCL Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days HCL Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, HCL Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Orissa Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Orissa Minerals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HCL Technologies and Orissa Minerals

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

The idea behind HCL Technologies Limited and The Orissa Minerals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.