Correlation Between Modi Rubber and METALIETF

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

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

Diversification Opportunities for Modi Rubber and METALIETF

0.08

Correlation Coefficient

Modi Rubber  METALIETF

Significant diversification

The 3 months correlation between Modi and METALIETF is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Modi Rubber Limited and METALIETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALIETF and Modi Rubber 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 Modi Rubber Limited are associated (or correlated) with METALIETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALIETF has no effect on the direction of Modi Rubber i.e., Modi Rubber and METALIETF go up and down completely randomly.

Pair Corralation between Modi Rubber and METALIETF

Assuming the 90 days trading horizon Modi Rubber Limited is expected to generate 3.8 times more return on investment than METALIETF. However, Modi Rubber is 3.8 times more volatile than METALIETF. It trades about 0.09 of its potential returns per unit of risk. METALIETF is currently generating about 0.12 per unit of risk. If you would invest  10,478  in Modi Rubber Limited on April 21, 2025 and sell it today you would earn a total of  2,311  from holding Modi Rubber Limited or generate 22.06% return on investment over 90 days.

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

Modi Rubber Limited  vs.  METALIETF

Modi Rubber Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Modi Rubber Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Modi Rubber sustained solid returns over the last few months and may actually be approaching a breakup point.

METALIETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METALIETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, METALIETF may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Modi Rubber and METALIETF

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

The idea behind Modi Rubber Limited and METALIETF 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.