Correlation Between AUTHUM INVESTMENT and Sarthak Metals

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

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

Diversification Opportunities for AUTHUM INVESTMENT and Sarthak Metals

0.8

Correlation Coefficient

AUTHUM INVESTMENT  Sarthak Metals

Very poor diversification

The 3 months correlation between AUTHUM and Sarthak is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AUTHUM INVESTMENT INFRASTRUCTU and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and AUTHUM INVESTMENT 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 AUTHUM INVESTMENT INFRASTRUCTU 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 AUTHUM INVESTMENT i.e., AUTHUM INVESTMENT and Sarthak Metals go up and down completely randomly.

Pair Corralation between AUTHUM INVESTMENT and Sarthak Metals

Assuming the 90 days trading horizon AUTHUM INVESTMENT INFRASTRUCTU is expected to generate 1.14 times more return on investment than Sarthak Metals. However, AUTHUM INVESTMENT is 1.14 times more volatile than Sarthak Metals Limited. It trades about -0.01 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.14 per unit of risk. If you would invest  167,080  in AUTHUM INVESTMENT INFRASTRUCTU on December 24, 2024 and sell it today you would lose (9,085) from holding AUTHUM INVESTMENT INFRASTRUCTU or give up 5.44% of portfolio value over 90 days.

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

AUTHUM INVESTMENT INFRASTRUCTU  vs.  Sarthak Metals Limited

AUTHUM INVESTMENT

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUTHUM INVESTMENT INFRASTRUCTU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AUTHUM INVESTMENT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sarthak Metals

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AUTHUM INVESTMENT and Sarthak Metals

The main advantage of trading using opposite AUTHUM INVESTMENT and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTHUM INVESTMENT 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 AUTHUM INVESTMENT INFRASTRUCTU 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.