Correlation Between Automotive Stampings and Sandhar Technologies

Can any of the company-specific risk be diversified away by investing in both Automotive Stampings and Sandhar Technologies 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 Automotive Stampings and Sandhar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Automotive Stampings and and Sandhar Technologies Limited, you can compare the effects of market volatilities on Automotive Stampings and Sandhar Technologies 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 Automotive Stampings with a short position of Sandhar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Stampings and Sandhar Technologies.

Diversification Opportunities for Automotive Stampings and Sandhar Technologies

0.72

Correlation Coefficient

Automotive Stampings  Sandhar Technologies

Poor diversification

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

Pair Corralation between Automotive Stampings and Sandhar Technologies

Assuming the 90 days trading horizon Automotive Stampings and is expected to under-perform the Sandhar Technologies. In addition to that, Automotive Stampings is 1.04 times more volatile than Sandhar Technologies Limited. It trades about -0.12 of its total potential returns per unit of risk. Sandhar Technologies Limited is currently generating about 0.0 per unit of volatility. If you would invest  54,676  in Sandhar Technologies Limited on September 26, 2024 and sell it today you would lose (2,341) from holding Sandhar Technologies Limited or give up 4.28% of portfolio value over 90 days.

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

Automotive Stampings and  vs.  Sandhar Technologies Limited

Automotive Stampings and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Stampings and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sandhar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandhar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Automotive Stampings and Sandhar Technologies

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

The idea behind Automotive Stampings and and Sandhar Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.