Correlation Between Sarveshwar Foods and Agarwal Industrial

Can any of the company-specific risk be diversified away by investing in both Sarveshwar Foods and Agarwal Industrial 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 Sarveshwar Foods and Agarwal Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sarveshwar Foods and Agarwal Industrial

0.93

Correlation Coefficient

Sarveshwar Foods  Agarwal Industrial

Almost no diversification

The 3 months correlation between Sarveshwar and Agarwal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sarveshwar Foods Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Sarveshwar Foods 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 Sarveshwar Foods Limited are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Sarveshwar Foods i.e., Sarveshwar Foods and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Sarveshwar Foods and Agarwal Industrial

Assuming the 90 days trading horizon Sarveshwar Foods Limited is expected to under-perform the Agarwal Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Sarveshwar Foods Limited is 1.26 times less risky than Agarwal Industrial. The stock trades about -0.21 of its potential returns per unit of risk. The Agarwal Industrial is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  125,985  in Agarwal Industrial on December 30, 2024 and sell it today you would lose (28,710) from holding Agarwal Industrial or give up 22.79% of portfolio value over 90 days.

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

Sarveshwar Foods Limited  vs.  Agarwal Industrial

Sarveshwar Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarveshwar Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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.

Agarwal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sarveshwar Foods and Agarwal Industrial

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

The idea behind Sarveshwar Foods Limited and Agarwal Industrial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.