Correlation Between Sarthak Metals and Cambridge Technology

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

Diversification Opportunities for Sarthak Metals and Cambridge Technology

0.36

Correlation Coefficient

Sarthak Metals  Cambridge Technology

Weak diversification

The 3 months correlation between Sarthak and Cambridge is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology 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 Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Cambridge Technology go up and down completely randomly.

Pair Corralation between Sarthak Metals and Cambridge Technology

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Cambridge Technology. In addition to that, Sarthak Metals is 1.13 times more volatile than Cambridge Technology Enterprises. It trades about -0.06 of its total potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.0 per unit of volatility. If you would invest  10,801  in Cambridge Technology Enterprises on October 3, 2024 and sell it today you would lose (292.00) from holding Cambridge Technology Enterprises or give up 2.7% of portfolio value over 90 days.

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

Sarthak Metals Limited  vs.  Cambridge Technology Enterpris

Sarthak Metals

Risk-Adjusted Performance

0 of 100

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.

Cambridge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambridge Technology Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Cambridge Technology is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sarthak Metals and Cambridge Technology

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

The idea behind Sarthak Metals Limited and Cambridge Technology Enterprises 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.