Correlation Between Edelweiss Financial and Sasken Technologies

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

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

Diversification Opportunities for Edelweiss Financial and Sasken Technologies

0.14

Correlation Coefficient

Edelweiss Financial  Sasken Technologies

Average diversification

The 3 months correlation between Edelweiss and Sasken is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Edelweiss Financial Services and Sasken Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasken Technologies and Edelweiss Financial 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 Edelweiss Financial Services are associated (or correlated) with Sasken Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasken Technologies has no effect on the direction of Edelweiss Financial i.e., Edelweiss Financial and Sasken Technologies go up and down completely randomly.

Pair Corralation between Edelweiss Financial and Sasken Technologies

Assuming the 90 days trading horizon Edelweiss Financial Services is expected to under-perform the Sasken Technologies. In addition to that, Edelweiss Financial is 1.32 times more volatile than Sasken Technologies Limited. It trades about -0.13 of its total potential returns per unit of risk. Sasken Technologies Limited is currently generating about -0.12 per unit of volatility. If you would invest  224,205  in Sasken Technologies Limited on October 8, 2024 and sell it today you would lose (12,145) from holding Sasken Technologies Limited or give up 5.42% of portfolio value over 90 days.

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

Edelweiss Financial Services  vs.  Sasken Technologies Limited

Edelweiss Financial

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edelweiss Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Edelweiss Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Sasken Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edelweiss Financial and Sasken Technologies

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

The idea behind Edelweiss Financial Services and Sasken 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..