Correlation Between SEPC and Sportking India

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

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

Diversification Opportunities for SEPC and Sportking India

0.3

Correlation Coefficient

SEPC  Sportking India

Weak diversification

The 3 months correlation between SEPC and Sportking is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SEPC Limited and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India and SEPC 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 SEPC Limited are associated (or correlated) with Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of SEPC i.e., SEPC and Sportking India go up and down completely randomly.

Pair Corralation between SEPC and Sportking India

Assuming the 90 days trading horizon SEPC Limited is expected to under-perform the Sportking India. But the stock apears to be less risky and, when comparing its historical volatility, SEPC Limited is 1.05 times less risky than Sportking India. The stock trades about -0.16 of its potential returns per unit of risk. The Sportking India Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,050  in Sportking India Limited on October 26, 2024 and sell it today you would lose (173.00) from holding Sportking India Limited or give up 1.72% of portfolio value over 90 days.

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

SEPC Limited  vs.  Sportking India Limited

SEPC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEPC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sportking India

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SEPC and Sportking India

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

The idea behind SEPC Limited and Sportking India 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.