Correlation Between Agarwal Industrial and Syrma SGS

Can any of the company-specific risk be diversified away by investing in both Agarwal Industrial and Syrma SGS 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 Agarwal Industrial and Syrma SGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agarwal Industrial and Syrma SGS Technology, you can compare the effects of market volatilities on Agarwal Industrial and Syrma SGS 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 Agarwal Industrial with a short position of Syrma SGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agarwal Industrial and Syrma SGS.

Diversification Opportunities for Agarwal Industrial and Syrma SGS

0.93

Correlation Coefficient

Agarwal Industrial  Syrma SGS

Almost no diversification

The 3 months correlation between Agarwal and Syrma is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Syrma SGS Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrma SGS Technology and Agarwal Industrial 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 Agarwal Industrial are associated (or correlated) with Syrma SGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrma SGS Technology has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Syrma SGS go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Syrma SGS

Assuming the 90 days trading horizon Agarwal Industrial is expected to generate 0.73 times more return on investment than Syrma SGS. However, Agarwal Industrial is 1.37 times less risky than Syrma SGS. It trades about -0.09 of its potential returns per unit of risk. Syrma SGS Technology is currently generating about -0.07 per unit of risk. If you would invest  129,645  in Agarwal Industrial on December 24, 2024 and sell it today you would lose (23,430) from holding Agarwal Industrial or give up 18.07% of portfolio value over 90 days.

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

Agarwal Industrial  vs.  Syrma SGS Technology

Agarwal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Syrma SGS Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Syrma SGS Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agarwal Industrial and Syrma SGS

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

The idea behind Agarwal Industrial and Syrma SGS Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.