Correlation Between Prakash Steelage and Vibhor Steel

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

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

Diversification Opportunities for Prakash Steelage and Vibhor Steel

-0.27

Correlation Coefficient

Prakash Steelage  Vibhor Steel

Very good diversification

The 3 months correlation between Prakash and Vibhor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Prakash Steelage Limited and Vibhor Steel Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vibhor Steel Tubes and Prakash Steelage 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 Prakash Steelage Limited are associated (or correlated) with Vibhor Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vibhor Steel Tubes has no effect on the direction of Prakash Steelage i.e., Prakash Steelage and Vibhor Steel go up and down completely randomly.

Pair Corralation between Prakash Steelage and Vibhor Steel

Assuming the 90 days trading horizon Prakash Steelage Limited is expected to under-perform the Vibhor Steel. But the stock apears to be less risky and, when comparing its historical volatility, Prakash Steelage Limited is 2.31 times less risky than Vibhor Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Vibhor Steel Tubes is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16,422  in Vibhor Steel Tubes on April 22, 2025 and sell it today you would earn a total of  1,266  from holding Vibhor Steel Tubes or generate 7.71% return on investment over 90 days.

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

Prakash Steelage Limited  vs.  Vibhor Steel Tubes

Prakash Steelage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prakash Steelage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vibhor Steel Tubes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vibhor Steel Tubes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Vibhor Steel may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Prakash Steelage and Vibhor Steel

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

The idea behind Prakash Steelage Limited and Vibhor Steel Tubes 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.