Correlation Between Ratnamani Metals and Sportking India

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

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

Diversification Opportunities for Ratnamani Metals and Sportking India

-0.06

Correlation Coefficient

Ratnamani Metals  Sportking India

Good diversification

The 3 months correlation between Ratnamani and Sportking is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ratnamani Metals Tubes and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India and Ratnamani Metals 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 Ratnamani Metals Tubes are associated (or correlated) with Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of Ratnamani Metals i.e., Ratnamani Metals and Sportking India go up and down completely randomly.

Pair Corralation between Ratnamani Metals and Sportking India

Assuming the 90 days trading horizon Ratnamani Metals Tubes is expected to under-perform the Sportking India. But the stock apears to be less risky and, when comparing its historical volatility, Ratnamani Metals Tubes is 3.3 times less risky than Sportking India. The stock trades about -0.2 of its potential returns per unit of risk. The Sportking India Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9,794  in Sportking India Limited on September 29, 2024 and sell it today you would earn a total of  893.00  from holding Sportking India Limited or generate 9.12% return on investment over 90 days.

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

Ratnamani Metals Tubes  vs.  Sportking India Limited

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sportking India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ratnamani Metals and Sportking India

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

The idea behind Ratnamani Metals Tubes and Sportking India 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.