Correlation Between Sanginita Chemicals and Power Finance

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

Diversification Opportunities for Sanginita Chemicals and Power Finance

0.47

Correlation Coefficient

Sanginita Chemicals  Power Finance

Very weak diversification

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

Pair Corralation between Sanginita Chemicals and Power Finance

Assuming the 90 days trading horizon Sanginita Chemicals Limited is expected to under-perform the Power Finance. But the stock apears to be less risky and, when comparing its historical volatility, Sanginita Chemicals Limited is 1.03 times less risky than Power Finance. The stock trades about -0.01 of its potential returns per unit of risk. The Power Finance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,293  in Power Finance on October 22, 2024 and sell it today you would earn a total of  33,052  from holding Power Finance or generate 321.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sanginita Chemicals Limited  vs.  Power Finance

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

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 fairly strong forward indicators, Sanginita Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Power Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Power Finance is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sanginita Chemicals and Power Finance

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

The idea behind Sanginita Chemicals Limited and Power Finance 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..