Correlation Between Man Infraconstructio and DCM Shriram

Can any of the company-specific risk be diversified away by investing in both Man Infraconstructio and DCM Shriram 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 Man Infraconstructio and DCM Shriram into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Man Infraconstruction Limited and DCM Shriram Limited, you can compare the effects of market volatilities on Man Infraconstructio and DCM Shriram 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 Man Infraconstructio with a short position of DCM Shriram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Man Infraconstructio and DCM Shriram.

Diversification Opportunities for Man Infraconstructio and DCM Shriram

0.88

Correlation Coefficient

Man Infraconstructio  DCM Shriram

Very poor diversification

The 3 months correlation between Man and DCM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Man Infraconstruction Limited and DCM Shriram Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCM Shriram Limited and Man Infraconstructio 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 Man Infraconstruction Limited are associated (or correlated) with DCM Shriram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCM Shriram Limited has no effect on the direction of Man Infraconstructio i.e., Man Infraconstructio and DCM Shriram go up and down completely randomly.

Pair Corralation between Man Infraconstructio and DCM Shriram

Assuming the 90 days trading horizon Man Infraconstructio is expected to generate 2.02 times less return on investment than DCM Shriram. But when comparing it to its historical volatility, Man Infraconstruction Limited is 1.11 times less risky than DCM Shriram. It trades about 0.1 of its potential returns per unit of risk. DCM Shriram Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  106,880  in DCM Shriram Limited on April 23, 2025 and sell it today you would earn a total of  32,960  from holding DCM Shriram Limited or generate 30.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Man Infraconstruction Limited  vs.  DCM Shriram Limited

Man Infraconstruction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

DCM Shriram Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DCM Shriram Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, DCM Shriram demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Man Infraconstructio and DCM Shriram

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

The idea behind Man Infraconstruction Limited and DCM Shriram 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.