Correlation Between Rico Auto and Sasken Technologies

Can any of the company-specific risk be diversified away by investing in both Rico Auto and Sasken Technologies 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 Rico Auto and Sasken Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Rico Auto and Sasken Technologies

-0.73

Correlation Coefficient

Rico Auto  Sasken Technologies

Pay attention - limited upside

The 3 months correlation between Rico and Sasken is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and Sasken Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasken Technologies and Rico Auto 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 Rico Auto Industries are associated (or correlated) with Sasken Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasken Technologies has no effect on the direction of Rico Auto i.e., Rico Auto and Sasken Technologies go up and down completely randomly.

Pair Corralation between Rico Auto and Sasken Technologies

Assuming the 90 days trading horizon Rico Auto is expected to generate 2.32 times less return on investment than Sasken Technologies. In addition to that, Rico Auto is 1.25 times more volatile than Sasken Technologies Limited. It trades about 0.03 of its total potential returns per unit of risk. Sasken Technologies Limited is currently generating about 0.08 per unit of volatility. If you would invest  88,226  in Sasken Technologies Limited on October 6, 2024 and sell it today you would earn a total of  125,929  from holding Sasken Technologies Limited or generate 142.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.57%
Values	Daily Returns

Rico Auto Industries  vs.  Sasken Technologies Limited

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rico Auto is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Sasken Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rico Auto and Sasken Technologies

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

The idea behind Rico Auto Industries and Sasken Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.