Correlation Between Sanginita Chemicals and Xchanging Solutions

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

Diversification Opportunities for Sanginita Chemicals and Xchanging Solutions

0.78

Correlation Coefficient

Sanginita Chemicals  Xchanging Solutions

Poor diversification

The 3 months correlation between Sanginita and Xchanging is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sanginita Chemicals Limited and Xchanging Solutions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xchanging Solutions 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 Xchanging Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xchanging Solutions has no effect on the direction of Sanginita Chemicals i.e., Sanginita Chemicals and Xchanging Solutions go up and down completely randomly.

Pair Corralation between Sanginita Chemicals and Xchanging Solutions

Assuming the 90 days trading horizon Sanginita Chemicals Limited is expected to under-perform the Xchanging Solutions. In addition to that, Sanginita Chemicals is 1.71 times more volatile than Xchanging Solutions Limited. It trades about -0.18 of its total potential returns per unit of risk. Xchanging Solutions Limited is currently generating about -0.15 per unit of volatility. If you would invest  11,129  in Xchanging Solutions Limited on December 30, 2024 and sell it today you would lose (2,534) from holding Xchanging Solutions Limited or give up 22.77% of portfolio value over 90 days.

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

Sanginita Chemicals Limited  vs.  Xchanging Solutions 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 uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Xchanging Solutions

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sanginita Chemicals and Xchanging Solutions

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

The idea behind Sanginita Chemicals Limited and Xchanging Solutions 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.