Correlation Between Mari Petroleum and ITTEFAQ Iron

Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and ITTEFAQ Iron 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 Mari Petroleum and ITTEFAQ Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mari Petroleum and ITTEFAQ Iron

0.46

Correlation Coefficient

Mari Petroleum  ITTEFAQ Iron

Very weak diversification

The 3 months correlation between Mari and ITTEFAQ is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and Mari Petroleum 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 Mari Petroleum are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between Mari Petroleum and ITTEFAQ Iron

Assuming the 90 days trading horizon Mari Petroleum is expected to under-perform the ITTEFAQ Iron. But the stock apears to be less risky and, when comparing its historical volatility, Mari Petroleum is 1.83 times less risky than ITTEFAQ Iron. The stock trades about -0.01 of its potential returns per unit of risk. The ITTEFAQ Iron Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  787.00  in ITTEFAQ Iron Industries on April 23, 2025 and sell it today you would earn a total of  113.00  from holding ITTEFAQ Iron Industries or generate 14.36% return on investment over 90 days.

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

Mari Petroleum  vs.  ITTEFAQ Iron Industries

Mari Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mari Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mari Petroleum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITTEFAQ Iron Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, ITTEFAQ Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mari Petroleum and ITTEFAQ Iron

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

The idea behind Mari Petroleum and ITTEFAQ Iron Industries 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.