Correlation Between Tata Chemicals and Amines Plasticizers

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

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

Diversification Opportunities for Tata Chemicals and Amines Plasticizers

0.91

Correlation Coefficient

Tata Chemicals  Amines Plasticizers

Almost no diversification

The 3 months correlation between Tata and Amines is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tata Chemicals Limited and Amines Plasticizers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amines Plasticizers and Tata 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 Tata Chemicals Limited are associated (or correlated) with Amines Plasticizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amines Plasticizers has no effect on the direction of Tata Chemicals i.e., Tata Chemicals and Amines Plasticizers go up and down completely randomly.

Pair Corralation between Tata Chemicals and Amines Plasticizers

Assuming the 90 days trading horizon Tata Chemicals Limited is expected to generate 0.65 times more return on investment than Amines Plasticizers. However, Tata Chemicals Limited is 1.55 times less risky than Amines Plasticizers. It trades about 0.1 of its potential returns per unit of risk. Amines Plasticizers Limited is currently generating about 0.05 per unit of risk. If you would invest  85,365  in Tata Chemicals Limited on April 20, 2025 and sell it today you would earn a total of  7,830  from holding Tata Chemicals Limited or generate 9.17% return on investment over 90 days.

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

Tata Chemicals Limited  vs.  Amines Plasticizers Limited

Tata Chemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Chemicals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Tata Chemicals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Amines Plasticizers

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Tata Chemicals and Amines Plasticizers

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

The idea behind Tata Chemicals Limited and Amines Plasticizers Limited 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.