Correlation Between Sakar Healthcare and Generic Engineering

Can any of the company-specific risk be diversified away by investing in both Sakar Healthcare and Generic Engineering 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 Sakar Healthcare and Generic Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sakar Healthcare Limited and Generic Engineering Construction, you can compare the effects of market volatilities on Sakar Healthcare and Generic Engineering 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 Sakar Healthcare with a short position of Generic Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sakar Healthcare and Generic Engineering.

Diversification Opportunities for Sakar Healthcare and Generic Engineering

0.47

Correlation Coefficient

Sakar Healthcare  Generic Engineering

Very weak diversification

The 3 months correlation between Sakar and Generic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sakar Healthcare Limited and Generic Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Engineering and Sakar Healthcare 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 Sakar Healthcare Limited are associated (or correlated) with Generic Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Engineering has no effect on the direction of Sakar Healthcare i.e., Sakar Healthcare and Generic Engineering go up and down completely randomly.

Pair Corralation between Sakar Healthcare and Generic Engineering

Assuming the 90 days trading horizon Sakar Healthcare Limited is expected to generate 0.42 times more return on investment than Generic Engineering. However, Sakar Healthcare Limited is 2.36 times less risky than Generic Engineering. It trades about -0.1 of its potential returns per unit of risk. Generic Engineering Construction is currently generating about -0.13 per unit of risk. If you would invest  30,410  in Sakar Healthcare Limited on October 25, 2024 and sell it today you would lose (960.00) from holding Sakar Healthcare Limited or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sakar Healthcare Limited  vs.  Generic Engineering Constructi

Sakar Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sakar Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Sakar Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Generic Engineering

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Engineering Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Generic Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sakar Healthcare and Generic Engineering

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

The idea behind Sakar Healthcare Limited and Generic Engineering Construction 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.