Correlation Between Omkar Speciality and SAL Steel

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

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

Diversification Opportunities for Omkar Speciality and SAL Steel

0.28

Correlation Coefficient

Omkar Speciality  SAL Steel

Modest diversification

The 3 months correlation between Omkar and SAL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and Omkar Speciality 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 Omkar Speciality Chemicals are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and SAL Steel go up and down completely randomly.

Pair Corralation between Omkar Speciality and SAL Steel

Assuming the 90 days trading horizon Omkar Speciality Chemicals is expected to under-perform the SAL Steel. In addition to that, Omkar Speciality is 1.04 times more volatile than SAL Steel Limited. It trades about -0.08 of its total potential returns per unit of risk. SAL Steel Limited is currently generating about -0.07 per unit of volatility. If you would invest  2,488  in SAL Steel Limited on September 30, 2024 and sell it today you would lose (222.00) from holding SAL Steel Limited or give up 8.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Omkar Speciality Chemicals  vs.  SAL Steel Limited

Omkar Speciality Che

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SAL Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAL Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with Omkar Speciality and SAL Steel

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

The idea behind Omkar Speciality Chemicals and SAL Steel 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.