Correlation Between Niraj Ispat and Sarthak Metals

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

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

Diversification Opportunities for Niraj Ispat and Sarthak Metals

-0.38

Correlation Coefficient

Niraj Ispat  Sarthak Metals

Very good diversification

The 3 months correlation between Niraj and Sarthak is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Niraj Ispat Industries and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and Niraj Ispat 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 Niraj Ispat Industries 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 Niraj Ispat i.e., Niraj Ispat and Sarthak Metals go up and down completely randomly.

Pair Corralation between Niraj Ispat and Sarthak Metals

Assuming the 90 days trading horizon Niraj Ispat Industries is expected to generate 0.9 times more return on investment than Sarthak Metals. However, Niraj Ispat Industries is 1.11 times less risky than Sarthak Metals. It trades about 0.07 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about 0.02 per unit of risk. If you would invest  11,200  in Niraj Ispat Industries on October 1, 2024 and sell it today you would earn a total of  13,318  from holding Niraj Ispat Industries or generate 118.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.35%
Values	Daily Returns

Niraj Ispat Industries  vs.  Sarthak Metals Limited

Niraj Ispat Industries

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Niraj Ispat unveiled 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 unsteady 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 Niraj Ispat and Sarthak Metals

The main advantage of trading using opposite Niraj Ispat and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niraj Ispat 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 Niraj Ispat Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.