Correlation Between Pondy Oxides and Punjab Chemicals

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

By analyzing existing cross correlation between Pondy Oxides Chemicals and Punjab Chemicals Crop, you can compare the effects of market volatilities on Pondy Oxides and Punjab Chemicals 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 Pondy Oxides with a short position of Punjab Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pondy Oxides and Punjab Chemicals.

Diversification Opportunities for Pondy Oxides and Punjab Chemicals

0.74

Correlation Coefficient

Pondy Oxides  Punjab Chemicals

Poor diversification

The 3 months correlation between Pondy and Punjab is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pondy Oxides Chemicals and Punjab Chemicals Crop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Chemicals Crop and Pondy Oxides 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 Pondy Oxides Chemicals are associated (or correlated) with Punjab Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Chemicals Crop has no effect on the direction of Pondy Oxides i.e., Pondy Oxides and Punjab Chemicals go up and down completely randomly.

Pair Corralation between Pondy Oxides and Punjab Chemicals

Assuming the 90 days trading horizon Pondy Oxides Chemicals is expected to generate 1.06 times more return on investment than Punjab Chemicals. However, Pondy Oxides is 1.06 times more volatile than Punjab Chemicals Crop. It trades about 0.14 of its potential returns per unit of risk. Punjab Chemicals Crop is currently generating about 0.15 per unit of risk. If you would invest  74,050  in Pondy Oxides Chemicals on April 25, 2025 and sell it today you would earn a total of  20,800  from holding Pondy Oxides Chemicals or generate 28.09% return on investment over 90 days.

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

Pondy Oxides Chemicals  vs.  Punjab Chemicals Crop

Pondy Oxides Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pondy Oxides Chemicals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pondy Oxides unveiled solid returns over the last few months and may actually be approaching a breakup point.

Punjab Chemicals Crop

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Punjab Chemicals Crop are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Punjab Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pondy Oxides and Punjab Chemicals

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

The idea behind Pondy Oxides Chemicals and Punjab Chemicals Crop 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.