Correlation Between Punjab Chemicals and Pondy Oxides

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

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

Diversification Opportunities for Punjab Chemicals and Pondy Oxides

0.74

Correlation Coefficient

Punjab Chemicals  Pondy Oxides

Poor diversification

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

Pair Corralation between Punjab Chemicals and Pondy Oxides

Assuming the 90 days trading horizon Punjab Chemicals is expected to generate 1.01 times less return on investment than Pondy Oxides. But when comparing it to its historical volatility, Punjab Chemicals Crop is 1.06 times less risky than Pondy Oxides. It trades about 0.15 of its potential returns per unit of risk. Pondy Oxides Chemicals is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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

Punjab Chemicals Crop  vs.  Pondy Oxides Chemicals

Punjab Chemicals Crop

Risk-Adjusted Performance

OK

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.

Pondy Oxides Chemicals

Risk-Adjusted Performance

OK

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.

Pair Trading with Punjab Chemicals and Pondy Oxides

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

The idea behind Punjab Chemicals Crop and Pondy Oxides Chemicals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.