Correlation Between Sarthak Metals and Bikaji Foods

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Can any of the company-specific risk be diversified away by investing in both Sarthak Metals and Bikaji Foods 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 Bikaji Foods 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 Bikaji Foods International, you can compare the effects of market volatilities on Sarthak Metals and Bikaji Foods 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 Bikaji Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarthak Metals and Bikaji Foods.

Diversification Opportunities for Sarthak Metals and Bikaji Foods

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sarthak and Bikaji is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Bikaji Foods International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bikaji Foods Interna 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 Bikaji Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bikaji Foods Interna has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Bikaji Foods go up and down completely randomly.

Pair Corralation between Sarthak Metals and Bikaji Foods

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to generate 1.72 times more return on investment than Bikaji Foods. However, Sarthak Metals is 1.72 times more volatile than Bikaji Foods International. It trades about 0.08 of its potential returns per unit of risk. Bikaji Foods International is currently generating about -0.28 per unit of risk. If you would invest  16,174  in Sarthak Metals Limited on October 8, 2024 and sell it today you would earn a total of  681.00  from holding Sarthak Metals Limited or generate 4.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sarthak Metals Limited  vs.  Bikaji Foods International

 Performance 
       Timeline  
Sarthak Metals 

Risk-Adjusted Performance

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Weak
 
Strong
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 comparatively stable basic indicators, Sarthak Metals is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Bikaji Foods Interna 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bikaji Foods International 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sarthak Metals and Bikaji Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sarthak Metals and Bikaji Foods

The main advantage of trading using opposite Sarthak Metals and Bikaji Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarthak Metals position performs unexpectedly, Bikaji Foods 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 Bikaji Foods will offset losses from the drop in Bikaji Foods' long position.
The idea behind Sarthak Metals Limited and Bikaji Foods International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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