Correlation Between DiGiSPICE Technologies and Agarwal Industrial

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

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

Diversification Opportunities for DiGiSPICE Technologies and Agarwal Industrial

0.79

Correlation Coefficient

DiGiSPICE Technologies  Agarwal Industrial

Poor diversification

The 3 months correlation between DiGiSPICE and Agarwal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DiGiSPICE Technologies Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and DiGiSPICE Technologies 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 DiGiSPICE Technologies Limited are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of DiGiSPICE Technologies i.e., DiGiSPICE Technologies and Agarwal Industrial go up and down completely randomly.

Pair Corralation between DiGiSPICE Technologies and Agarwal Industrial

Assuming the 90 days trading horizon DiGiSPICE Technologies is expected to generate 4.32 times less return on investment than Agarwal Industrial. In addition to that, DiGiSPICE Technologies is 1.25 times more volatile than Agarwal Industrial. It trades about 0.01 of its total potential returns per unit of risk. Agarwal Industrial is currently generating about 0.04 per unit of volatility. If you would invest  96,775  in Agarwal Industrial on September 4, 2024 and sell it today you would earn a total of  21,625  from holding Agarwal Industrial or generate 22.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.18%
Values	Daily Returns

DiGiSPICE Technologies Limited  vs.  Agarwal Industrial

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Agarwal Industrial

Risk-Adjusted Performance

0 of 100

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 rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DiGiSPICE Technologies and Agarwal Industrial

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

The idea behind DiGiSPICE Technologies Limited and Agarwal Industrial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.