Correlation Between Sanginita Chemicals and Zuari Agro

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

Diversification Opportunities for Sanginita Chemicals and Zuari Agro

-0.05

Correlation Coefficient

Sanginita Chemicals  Zuari Agro

Good diversification

The 3 months correlation between Sanginita and Zuari is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sanginita Chemicals Limited and Zuari Agro Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuari Agro Chemicals 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 Zuari Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuari Agro Chemicals has no effect on the direction of Sanginita Chemicals i.e., Sanginita Chemicals and Zuari Agro go up and down completely randomly.

Pair Corralation between Sanginita Chemicals and Zuari Agro

Assuming the 90 days trading horizon Sanginita Chemicals is expected to generate 12.11 times less return on investment than Zuari Agro. But when comparing it to its historical volatility, Sanginita Chemicals Limited is 1.01 times less risky than Zuari Agro. It trades about 0.02 of its potential returns per unit of risk. Zuari Agro Chemicals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  19,138  in Zuari Agro Chemicals on September 12, 2024 and sell it today you would earn a total of  6,023  from holding Zuari Agro Chemicals or generate 31.47% return on investment over 90 days.

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

Sanginita Chemicals Limited  vs.  Zuari Agro Chemicals

Sanginita Chemicals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanginita Chemicals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Zuari Agro Chemicals

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zuari Agro Chemicals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Zuari Agro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanginita Chemicals and Zuari Agro

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

The idea behind Sanginita Chemicals Limited and Zuari Agro Chemicals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.