Correlation Between India Glycols and Sportking India

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

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

Diversification Opportunities for India Glycols and Sportking India

0.37

Correlation Coefficient

India Glycols  Sportking India

Weak diversification

The 3 months correlation between India and Sportking is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding India Glycols Limited and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India and India Glycols 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 India Glycols Limited are associated (or correlated) with Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of India Glycols i.e., India Glycols and Sportking India go up and down completely randomly.

Pair Corralation between India Glycols and Sportking India

Assuming the 90 days trading horizon India Glycols Limited is expected to generate 1.06 times more return on investment than Sportking India. However, India Glycols is 1.06 times more volatile than Sportking India Limited. It trades about 0.03 of its potential returns per unit of risk. Sportking India Limited is currently generating about -0.16 per unit of risk. If you would invest  133,180  in India Glycols Limited on September 4, 2024 and sell it today you would earn a total of  2,710  from holding India Glycols Limited or generate 2.03% return on investment over 90 days.

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

India Glycols Limited  vs.  Sportking India Limited

India Glycols Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in India Glycols Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, India Glycols is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Sportking India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Pair Trading with India Glycols and Sportking India

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

The idea behind India Glycols Limited and Sportking India 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..