Correlation Between Maithan Alloys and PI Industries

Can any of the company-specific risk be diversified away by investing in both Maithan Alloys and PI Industries 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 Maithan Alloys and PI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Maithan Alloys and PI Industries

0.89

Correlation Coefficient

Maithan Alloys  PI Industries

Very poor diversification

The 3 months correlation between Maithan and PIIND is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Maithan Alloys Limited and PI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Industries Limited and Maithan Alloys 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 Maithan Alloys Limited are associated (or correlated) with PI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Industries Limited has no effect on the direction of Maithan Alloys i.e., Maithan Alloys and PI Industries go up and down completely randomly.

Pair Corralation between Maithan Alloys and PI Industries

Assuming the 90 days trading horizon Maithan Alloys Limited is expected to generate 1.78 times more return on investment than PI Industries. However, Maithan Alloys is 1.78 times more volatile than PI Industries Limited. It trades about 0.14 of its potential returns per unit of risk. PI Industries Limited is currently generating about 0.15 per unit of risk. If you would invest  95,792  in Maithan Alloys Limited on April 25, 2025 and sell it today you would earn a total of  20,858  from holding Maithan Alloys Limited or generate 21.77% return on investment over 90 days.

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

Maithan Alloys Limited  vs.  PI Industries Limited

Maithan Alloys

Risk-Adjusted Performance

OK

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

PI Industries Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PI Industries Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, PI Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maithan Alloys and PI Industries

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

The idea behind Maithan Alloys Limited and PI Industries 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.