Correlation Between Mangalore Chemicals and Indo Amines

Can any of the company-specific risk be diversified away by investing in both Mangalore Chemicals and Indo Amines 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 Mangalore Chemicals and Indo Amines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mangalore Chemicals Fertilizers and Indo Amines Limited, you can compare the effects of market volatilities on Mangalore Chemicals and Indo Amines 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 Mangalore Chemicals with a short position of Indo Amines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mangalore Chemicals and Indo Amines.

Diversification Opportunities for Mangalore Chemicals and Indo Amines

0.77

Correlation Coefficient

Mangalore Chemicals  Indo Amines

Poor diversification

The 3 months correlation between Mangalore and Indo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mangalore Chemicals Fertilizer and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines Limited and Mangalore Chemicals 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 Mangalore Chemicals Fertilizers are associated (or correlated) with Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of Mangalore Chemicals i.e., Mangalore Chemicals and Indo Amines go up and down completely randomly.

Pair Corralation between Mangalore Chemicals and Indo Amines

Assuming the 90 days trading horizon Mangalore Chemicals Fertilizers is expected to generate 1.06 times more return on investment than Indo Amines. However, Mangalore Chemicals is 1.06 times more volatile than Indo Amines Limited. It trades about 0.31 of its potential returns per unit of risk. Indo Amines Limited is currently generating about 0.14 per unit of risk. If you would invest  20,440  in Mangalore Chemicals Fertilizers on April 25, 2025 and sell it today you would earn a total of  11,560  from holding Mangalore Chemicals Fertilizers or generate 56.56% return on investment over 90 days.

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

Mangalore Chemicals Fertilizer  vs.  Indo Amines Limited

Mangalore Chemicals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mangalore Chemicals Fertilizers are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mangalore Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Indo Amines Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Amines Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating primary indicators, Indo Amines demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mangalore Chemicals and Indo Amines

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

The idea behind Mangalore Chemicals Fertilizers and Indo Amines 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.