Correlation Between Value Capital and Polyram Plastic

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

By analyzing existing cross correlation between Value Capital One and Polyram Plastic Industries, you can compare the effects of market volatilities on Value Capital and Polyram Plastic 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 Value Capital with a short position of Polyram Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Polyram Plastic.

Diversification Opportunities for Value Capital and Polyram Plastic

0.83

Correlation Coefficient

Value Capital  Polyram Plastic

Very poor diversification

The 3 months correlation between Value and Polyram is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One and Polyram Plastic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyram Plastic Indu and Value Capital 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 Value Capital One are associated (or correlated) with Polyram Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyram Plastic Indu has no effect on the direction of Value Capital i.e., Value Capital and Polyram Plastic go up and down completely randomly.

Pair Corralation between Value Capital and Polyram Plastic

Assuming the 90 days trading horizon Value Capital One is expected to generate 1.41 times more return on investment than Polyram Plastic. However, Value Capital is 1.41 times more volatile than Polyram Plastic Industries. It trades about 0.29 of its potential returns per unit of risk. Polyram Plastic Industries is currently generating about 0.17 per unit of risk. If you would invest  3,530  in Value Capital One on April 25, 2025 and sell it today you would earn a total of  1,710  from holding Value Capital One or generate 48.44% return on investment over 90 days.

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

Value Capital One  vs.  Polyram Plastic Industries

Value Capital One

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Value Capital One are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Value Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Polyram Plastic Indu

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polyram Plastic Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polyram Plastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Value Capital and Polyram Plastic

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

The idea behind Value Capital One and Polyram Plastic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.