Correlation Between Zenith Steel and Bandhan Bank

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

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

Diversification Opportunities for Zenith Steel and Bandhan Bank

0.61

Correlation Coefficient

Zenith Steel  Bandhan Bank

Poor diversification

The 3 months correlation between Zenith and Bandhan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zenith Steel Pipes and Bandhan Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bandhan Bank Limited and Zenith Steel 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 Zenith Steel Pipes are associated (or correlated) with Bandhan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bandhan Bank Limited has no effect on the direction of Zenith Steel i.e., Zenith Steel and Bandhan Bank go up and down completely randomly.

Pair Corralation between Zenith Steel and Bandhan Bank

Assuming the 90 days trading horizon Zenith Steel Pipes is expected to generate 1.81 times more return on investment than Bandhan Bank. However, Zenith Steel is 1.81 times more volatile than Bandhan Bank Limited. It trades about 0.12 of its potential returns per unit of risk. Bandhan Bank Limited is currently generating about 0.04 per unit of risk. If you would invest  645.00  in Zenith Steel Pipes on May 7, 2025 and sell it today you would earn a total of  177.00  from holding Zenith Steel Pipes or generate 27.44% return on investment over 90 days.

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

Zenith Steel Pipes  vs.  Bandhan Bank Limited

Zenith Steel Pipes

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Zenith Steel Pipes are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zenith Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bandhan Bank Limited

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Bandhan Bank Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Bandhan Bank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zenith Steel and Bandhan Bank

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

The idea behind Zenith Steel Pipes and Bandhan Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .