Correlation Between Sakar Healthcare and Kalpataru Projects

Can any of the company-specific risk be diversified away by investing in both Sakar Healthcare and Kalpataru Projects 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 Kalpataru Projects 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 Kalpataru Projects International, you can compare the effects of market volatilities on Sakar Healthcare and Kalpataru Projects 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 Kalpataru Projects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sakar Healthcare and Kalpataru Projects.

Diversification Opportunities for Sakar Healthcare and Kalpataru Projects

0.88

Correlation Coefficient

Sakar Healthcare  Kalpataru Projects

Very poor diversification

The 3 months correlation between Sakar and Kalpataru is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sakar Healthcare Limited and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects 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 Kalpataru Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalpataru Projects has no effect on the direction of Sakar Healthcare i.e., Sakar Healthcare and Kalpataru Projects go up and down completely randomly.

Pair Corralation between Sakar Healthcare and Kalpataru Projects

Assuming the 90 days trading horizon Sakar Healthcare Limited is expected to generate 0.89 times more return on investment than Kalpataru Projects. However, Sakar Healthcare Limited is 1.13 times less risky than Kalpataru Projects. It trades about -0.13 of its potential returns per unit of risk. Kalpataru Projects International is currently generating about -0.13 per unit of risk. If you would invest  30,410  in Sakar Healthcare Limited on December 24, 2024 and sell it today you would lose (6,389) from holding Sakar Healthcare Limited or give up 21.01% of portfolio value over 90 days.

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

Sakar Healthcare Limited  vs.  Kalpataru Projects Internation

Sakar Healthcare

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kalpataru Projects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kalpataru Projects International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sakar Healthcare and Kalpataru Projects

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

The idea behind Sakar Healthcare Limited and Kalpataru Projects International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.