Correlation Between Archean Chemical and Sarthak Metals

Can any of the company-specific risk be diversified away by investing in both Archean Chemical and Sarthak Metals 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 Archean Chemical and Sarthak Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Archean Chemical Industries and Sarthak Metals Limited, you can compare the effects of market volatilities on Archean Chemical and Sarthak Metals 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 Archean Chemical with a short position of Sarthak Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archean Chemical and Sarthak Metals.

Diversification Opportunities for Archean Chemical and Sarthak Metals

-0.27

Correlation Coefficient

Archean Chemical  Sarthak Metals

Very good diversification

The 3 months correlation between Archean and Sarthak is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Archean Chemical Industries and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and Archean Chemical 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 Archean Chemical Industries are associated (or correlated) with Sarthak Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarthak Metals has no effect on the direction of Archean Chemical i.e., Archean Chemical and Sarthak Metals go up and down completely randomly.

Pair Corralation between Archean Chemical and Sarthak Metals

Assuming the 90 days trading horizon Archean Chemical Industries is expected to generate 0.68 times more return on investment than Sarthak Metals. However, Archean Chemical Industries is 1.48 times less risky than Sarthak Metals. It trades about -0.06 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.09 per unit of risk. If you would invest  72,180  in Archean Chemical Industries on September 28, 2024 and sell it today you would lose (6,455) from holding Archean Chemical Industries or give up 8.94% of portfolio value over 90 days.

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

Archean Chemical Industries  vs.  Sarthak Metals Limited

Archean Chemical Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archean Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sarthak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarthak Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Archean Chemical and Sarthak Metals

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

The idea behind Archean Chemical Industries and Sarthak Metals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.