Correlation Between Federal Bank and Shradha Infraprojects

Can any of the company-specific risk be diversified away by investing in both Federal Bank and Shradha Infraprojects 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 Federal Bank and Shradha Infraprojects into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Federal Bank and Shradha Infraprojects Limited, you can compare the effects of market volatilities on Federal Bank and Shradha Infraprojects 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 Federal Bank with a short position of Shradha Infraprojects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Bank and Shradha Infraprojects.

Diversification Opportunities for Federal Bank and Shradha Infraprojects

0.0

Correlation Coefficient

Federal Bank  Shradha Infraprojects

Pay attention - limited upside

The 3 months correlation between Federal and Shradha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Federal Bank and Shradha Infraprojects Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shradha Infraprojects and Federal Bank 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 The Federal Bank are associated (or correlated) with Shradha Infraprojects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shradha Infraprojects has no effect on the direction of Federal Bank i.e., Federal Bank and Shradha Infraprojects go up and down completely randomly.

Pair Corralation between Federal Bank and Shradha Infraprojects

If you would invest (100.00) in Shradha Infraprojects Limited on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Shradha Infraprojects Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Federal Bank  vs.  Shradha Infraprojects Limited

Federal Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Federal Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Federal Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Shradha Infraprojects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shradha Infraprojects Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Shradha Infraprojects is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federal Bank and Shradha Infraprojects

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

The idea behind The Federal Bank and Shradha Infraprojects 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.