Correlation Between Sasken Technologies and Muthoot Finance

Can any of the company-specific risk be diversified away by investing in both Sasken Technologies and Muthoot 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 Sasken Technologies and Muthoot Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sasken Technologies and Muthoot Finance

-0.56

Correlation Coefficient

Sasken Technologies  Muthoot Finance

Excellent diversification

The 3 months correlation between Sasken and Muthoot is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sasken Technologies Limited and Muthoot Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muthoot Finance and Sasken Technologies 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 Sasken Technologies Limited are associated (or correlated) with Muthoot Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muthoot Finance has no effect on the direction of Sasken Technologies i.e., Sasken Technologies and Muthoot Finance go up and down completely randomly.

Pair Corralation between Sasken Technologies and Muthoot Finance

Assuming the 90 days trading horizon Sasken Technologies Limited is expected to under-perform the Muthoot Finance. In addition to that, Sasken Technologies is 1.77 times more volatile than Muthoot Finance Limited. It trades about -0.13 of its total potential returns per unit of risk. Muthoot Finance Limited is currently generating about 0.12 per unit of volatility. If you would invest  206,250  in Muthoot Finance Limited on December 26, 2024 and sell it today you would earn a total of  28,295  from holding Muthoot Finance Limited or generate 13.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Sasken Technologies Limited  vs.  Muthoot Finance Limited

Sasken Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sasken Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Muthoot Finance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Muthoot Finance Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Muthoot Finance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sasken Technologies and Muthoot Finance

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

The idea behind Sasken Technologies Limited and Muthoot Finance 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.