Correlation Between Global Health and Sukhjit Starch

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

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

Diversification Opportunities for Global Health and Sukhjit Starch

-0.22

Correlation Coefficient

Global Health  Sukhjit Starch

Very good diversification

The 3 months correlation between Global and Sukhjit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global Health Limited and Sukhjit Starch Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sukhjit Starch Chemicals and Global Health 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 Global Health Limited are associated (or correlated) with Sukhjit Starch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sukhjit Starch Chemicals has no effect on the direction of Global Health i.e., Global Health and Sukhjit Starch go up and down completely randomly.

Pair Corralation between Global Health and Sukhjit Starch

Assuming the 90 days trading horizon Global Health Limited is expected to under-perform the Sukhjit Starch. But the stock apears to be less risky and, when comparing its historical volatility, Global Health Limited is 1.43 times less risky than Sukhjit Starch. The stock trades about 0.0 of its potential returns per unit of risk. The Sukhjit Starch Chemicals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  26,163  in Sukhjit Starch Chemicals on September 4, 2024 and sell it today you would earn a total of  1,037  from holding Sukhjit Starch Chemicals or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Global Health Limited  vs.  Sukhjit Starch Chemicals

Global Health Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sukhjit Starch Chemicals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sukhjit Starch Chemicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Sukhjit Starch is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global Health and Sukhjit Starch

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

The idea behind Global Health Limited and Sukhjit Starch Chemicals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.