Correlation Between Sardar Chemical and Shifa International

Can any of the company-specific risk be diversified away by investing in both Sardar Chemical and Shifa International 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 Sardar Chemical and Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sardar Chemical Industries and Shifa International Hospitals, you can compare the effects of market volatilities on Sardar Chemical and Shifa International 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 Sardar Chemical with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sardar Chemical and Shifa International.

Diversification Opportunities for Sardar Chemical and Shifa International

0.01

Correlation Coefficient

Sardar Chemical  Shifa International

Significant diversification

The 3 months correlation between Sardar and Shifa is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sardar Chemical Industries and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International and Sardar Chemical 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 Sardar Chemical Industries are associated (or correlated) with Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Sardar Chemical i.e., Sardar Chemical and Shifa International go up and down completely randomly.

Pair Corralation between Sardar Chemical and Shifa International

Assuming the 90 days trading horizon Sardar Chemical is expected to generate 336.7 times less return on investment than Shifa International. In addition to that, Sardar Chemical is 1.73 times more volatile than Shifa International Hospitals. It trades about 0.0 of its total potential returns per unit of risk. Shifa International Hospitals is currently generating about 0.12 per unit of volatility. If you would invest  39,892  in Shifa International Hospitals on December 22, 2024 and sell it today you would earn a total of  8,114  from holding Shifa International Hospitals or generate 20.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.03%
Values	Daily Returns

Sardar Chemical Industries  vs.  Shifa International Hospitals

Sardar Chemical Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sardar Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sardar Chemical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Shifa International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shifa International Hospitals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shifa International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sardar Chemical and Shifa International

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

The idea behind Sardar Chemical Industries and Shifa International Hospitals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.