Correlation Between Raj Oil and Indo Amines

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

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

Diversification Opportunities for Raj Oil and Indo Amines

0.72

Correlation Coefficient

Raj Oil  Indo Amines

Poor diversification

The 3 months correlation between Raj and Indo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Raj Oil Mills and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines Limited and Raj Oil 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 Raj Oil Mills are associated (or correlated) with Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of Raj Oil i.e., Raj Oil and Indo Amines go up and down completely randomly.

Pair Corralation between Raj Oil and Indo Amines

Assuming the 90 days trading horizon Raj Oil is expected to generate 1.0 times less return on investment than Indo Amines. In addition to that, Raj Oil is 1.56 times more volatile than Indo Amines Limited. It trades about 0.07 of its total potential returns per unit of risk. Indo Amines Limited is currently generating about 0.11 per unit of volatility. If you would invest  12,575  in Indo Amines Limited on May 6, 2025 and sell it today you would earn a total of  2,079  from holding Indo Amines Limited or generate 16.53% return on investment over 90 days.

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

Raj Oil Mills  vs.  Indo Amines Limited

Raj Oil Mills

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raj Oil Mills are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Raj Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indo Amines Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Amines Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain primary indicators, Indo Amines demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raj Oil and Indo Amines

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

The idea behind Raj Oil Mills and Indo Amines 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.