Correlation Between PI Industries and Sanginita Chemicals

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

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

Diversification Opportunities for PI Industries and Sanginita Chemicals

0.77

Correlation Coefficient

PI Industries  Sanginita Chemicals

Poor diversification

The 3 months correlation between PIIND and Sanginita is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PI Industries Limited and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals and PI Industries 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 PI Industries Limited are associated (or correlated) with Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of PI Industries i.e., PI Industries and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between PI Industries and Sanginita Chemicals

Assuming the 90 days trading horizon PI Industries Limited is expected to generate 0.47 times more return on investment than Sanginita Chemicals. However, PI Industries Limited is 2.14 times less risky than Sanginita Chemicals. It trades about -0.07 of its potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.15 per unit of risk. If you would invest  373,729  in PI Industries Limited on December 27, 2024 and sell it today you would lose (30,924) from holding PI Industries Limited or give up 8.27% of portfolio value over 90 days.

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

PI Industries Limited  vs.  Sanginita Chemicals Limited

PI Industries Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days PI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sanginita Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with PI Industries and Sanginita Chemicals

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

The idea behind PI Industries Limited and Sanginita Chemicals 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 Stocks Directory module to find actively traded stocks across global markets.