Correlation Between Sanginita Chemicals and Bajaj Finance

Can any of the company-specific risk be diversified away by investing in both Sanginita Chemicals and Bajaj Finance 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 Sanginita Chemicals and Bajaj Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sanginita Chemicals Limited and Bajaj Finance Limited, you can compare the effects of market volatilities on Sanginita Chemicals and Bajaj Finance 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 Sanginita Chemicals with a short position of Bajaj Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanginita Chemicals and Bajaj Finance.

Diversification Opportunities for Sanginita Chemicals and Bajaj Finance

-0.86

Correlation Coefficient

Sanginita Chemicals  Bajaj Finance

Pay attention - limited upside

The 3 months correlation between Sanginita and Bajaj is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sanginita Chemicals Limited and Bajaj Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Finance Limited and Sanginita Chemicals 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 Sanginita Chemicals Limited are associated (or correlated) with Bajaj Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Finance Limited has no effect on the direction of Sanginita Chemicals i.e., Sanginita Chemicals and Bajaj Finance go up and down completely randomly.

Pair Corralation between Sanginita Chemicals and Bajaj Finance

Assuming the 90 days trading horizon Sanginita Chemicals Limited is expected to under-perform the Bajaj Finance. In addition to that, Sanginita Chemicals is 1.26 times more volatile than Bajaj Finance Limited. It trades about -0.16 of its total potential returns per unit of risk. Bajaj Finance Limited is currently generating about 0.25 per unit of volatility. If you would invest  657,590  in Bajaj Finance Limited on November 29, 2024 and sell it today you would earn a total of  212,950  from holding Bajaj Finance Limited or generate 32.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Sanginita Chemicals Limited  vs.  Bajaj Finance Limited

Sanginita Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Bajaj Finance Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Finance Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Bajaj Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanginita Chemicals and Bajaj Finance

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

The idea behind Sanginita Chemicals Limited and Bajaj Finance 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.