Correlation Between Punjab Sind and Sarthak Metals

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

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

Diversification Opportunities for Punjab Sind and Sarthak Metals

0.44

Correlation Coefficient

Punjab Sind  Sarthak Metals

Very weak diversification

The 3 months correlation between Punjab and Sarthak is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and Punjab Sind 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 Punjab Sind Bank 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 Punjab Sind i.e., Punjab Sind and Sarthak Metals go up and down completely randomly.

Pair Corralation between Punjab Sind and Sarthak Metals

Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 1.02 times more return on investment than Sarthak Metals. However, Punjab Sind is 1.02 times more volatile than Sarthak Metals Limited. It trades about 0.11 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about 0.09 per unit of risk. If you would invest  4,636  in Punjab Sind Bank on September 22, 2024 and sell it today you would earn a total of  237.00  from holding Punjab Sind Bank or generate 5.11% return on investment over 90 days.

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

Punjab Sind Bank  vs.  Sarthak Metals Limited

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Punjab Sind Bank 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.

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 comparatively stable basic indicators, Sarthak Metals 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 Punjab Sind and Sarthak Metals

The main advantage of trading using opposite Punjab Sind and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab Sind 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 Punjab Sind Bank 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.