Correlation Between Sarthak Metals and Agarwal Industrial

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

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

Diversification Opportunities for Sarthak Metals and Agarwal Industrial

0.69

Correlation Coefficient

Sarthak Metals  Agarwal Industrial

Poor diversification

The 3 months correlation between Sarthak and Agarwal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Sarthak Metals 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 Sarthak Metals 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 Sarthak Metals i.e., Sarthak Metals and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Sarthak Metals and Agarwal Industrial

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Agarwal Industrial. In addition to that, Sarthak Metals is 1.02 times more volatile than Agarwal Industrial. It trades about -0.04 of its total potential returns per unit of risk. Agarwal Industrial is currently generating about -0.04 per unit of volatility. If you would invest  102,175  in Agarwal Industrial on November 20, 2024 and sell it today you would lose (8,840) from holding Agarwal Industrial or give up 8.65% of portfolio value over 90 days.

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

Sarthak Metals Limited  vs.  Agarwal Industrial

Sarthak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarthak Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 latest unfluctuating performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sarthak Metals and Agarwal Industrial

The main advantage of trading using opposite Sarthak Metals and Agarwal Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarthak Metals 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 Sarthak Metals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.