Correlation Between Mahamaya Steel and Dhampur Bio

Can any of the company-specific risk be diversified away by investing in both Mahamaya Steel and Dhampur Bio 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 Mahamaya Steel and Dhampur Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mahamaya Steel Industries and Dhampur Bio Organics, you can compare the effects of market volatilities on Mahamaya Steel and Dhampur Bio 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 Mahamaya Steel with a short position of Dhampur Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahamaya Steel and Dhampur Bio.

Diversification Opportunities for Mahamaya Steel and Dhampur Bio

0.82

Correlation Coefficient

Mahamaya Steel  Dhampur Bio

Very poor diversification

The 3 months correlation between Mahamaya and Dhampur is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mahamaya Steel Industries and Dhampur Bio Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhampur Bio Organics and Mahamaya Steel 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 Mahamaya Steel Industries are associated (or correlated) with Dhampur Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhampur Bio Organics has no effect on the direction of Mahamaya Steel i.e., Mahamaya Steel and Dhampur Bio go up and down completely randomly.

Pair Corralation between Mahamaya Steel and Dhampur Bio

Assuming the 90 days trading horizon Mahamaya Steel Industries is expected to generate 0.89 times more return on investment than Dhampur Bio. However, Mahamaya Steel Industries is 1.13 times less risky than Dhampur Bio. It trades about 0.26 of its potential returns per unit of risk. Dhampur Bio Organics is currently generating about 0.19 per unit of risk. If you would invest  25,325  in Mahamaya Steel Industries on April 25, 2025 and sell it today you would earn a total of  10,020  from holding Mahamaya Steel Industries or generate 39.57% return on investment over 90 days.

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

Mahamaya Steel Industries  vs.  Dhampur Bio Organics

Mahamaya Steel Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mahamaya Steel Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mahamaya Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dhampur Bio Organics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dhampur Bio Organics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dhampur Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mahamaya Steel and Dhampur Bio

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

The idea behind Mahamaya Steel Industries and Dhampur Bio Organics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.