Correlation Between Indian Oil and Sumeet Industries

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

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

Diversification Opportunities for Indian Oil and Sumeet Industries

-0.79

Correlation Coefficient

Indian Oil  Sumeet Industries

Pay attention - limited upside

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

Pair Corralation between Indian Oil and Sumeet Industries

If you would invest  9,780  in Sumeet Industries Limited on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Sumeet Industries Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Indian Oil  vs.  Sumeet Industries Limited

Indian Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sumeet Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumeet Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Sumeet Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Oil and Sumeet Industries

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

The idea behind Indian Oil and Sumeet Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.