Correlation Between General Insurance and Sarthak Metals

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

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

Diversification Opportunities for General Insurance and Sarthak Metals

-0.22

Correlation Coefficient

General Insurance  Sarthak Metals

Very good diversification

The 3 months correlation between General and Sarthak is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and General Insurance 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 General Insurance 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 General Insurance i.e., General Insurance and Sarthak Metals go up and down completely randomly.

Pair Corralation between General Insurance and Sarthak Metals

Assuming the 90 days trading horizon General Insurance is expected to generate 0.87 times more return on investment than Sarthak Metals. However, General Insurance is 1.15 times less risky than Sarthak Metals. It trades about 0.11 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.09 per unit of risk. If you would invest  39,560  in General Insurance on September 28, 2024 and sell it today you would earn a total of  6,985  from holding General Insurance or generate 17.66% return on investment over 90 days.

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

General Insurance  vs.  Sarthak Metals Limited

General Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Sarthak Metals

Risk-Adjusted Performance

0 of 100

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

Pair Trading with General Insurance and Sarthak Metals

The main advantage of trading using opposite General Insurance and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance 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 General Insurance 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .