Correlation Between Paradeep Phosphates and Tech Mahindra

Can any of the company-specific risk be diversified away by investing in both Paradeep Phosphates and Tech Mahindra 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 Paradeep Phosphates and Tech Mahindra into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Paradeep Phosphates and Tech Mahindra

-0.01

Correlation Coefficient

Paradeep Phosphates  Tech Mahindra

Good diversification

The 3 months correlation between Paradeep and Tech is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Paradeep Phosphates Limited and Tech Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tech Mahindra Limited and Paradeep Phosphates 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 Paradeep Phosphates Limited are associated (or correlated) with Tech Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tech Mahindra Limited has no effect on the direction of Paradeep Phosphates i.e., Paradeep Phosphates and Tech Mahindra go up and down completely randomly.

Pair Corralation between Paradeep Phosphates and Tech Mahindra

Assuming the 90 days trading horizon Paradeep Phosphates Limited is expected to generate 2.77 times more return on investment than Tech Mahindra. However, Paradeep Phosphates is 2.77 times more volatile than Tech Mahindra Limited. It trades about 0.0 of its potential returns per unit of risk. Tech Mahindra Limited is currently generating about -0.07 per unit of risk. If you would invest  18,352  in Paradeep Phosphates Limited on July 21, 2025 and sell it today you would lose (553.00) from holding Paradeep Phosphates Limited or give up 3.01% of portfolio value over 90 days.

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

Paradeep Phosphates Limited  vs.  Tech Mahindra Limited

Paradeep Phosphates

Risk-Adjusted Performance

Weakest

Over the last 90 days Paradeep Phosphates Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Paradeep Phosphates is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tech Mahindra Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days Tech Mahindra Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Tech Mahindra is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Paradeep Phosphates and Tech Mahindra

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

The idea behind Paradeep Phosphates Limited and Tech Mahindra 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.