Correlation Between Sarthak Metals and Delta Manufacturing

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

Diversification Opportunities for Sarthak Metals and Delta Manufacturing

-0.33

Correlation Coefficient

Sarthak Metals  Delta Manufacturing

Very good diversification

The 3 months correlation between Sarthak and Delta is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Delta Manufacturing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Manufacturing 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 Delta Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Manufacturing has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Delta Manufacturing go up and down completely randomly.

Pair Corralation between Sarthak Metals and Delta Manufacturing

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 1.43 times less return on investment than Delta Manufacturing. But when comparing it to its historical volatility, Sarthak Metals Limited is 1.02 times less risky than Delta Manufacturing. It trades about 0.03 of its potential returns per unit of risk. Delta Manufacturing Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,155  in Delta Manufacturing Limited on September 28, 2024 and sell it today you would earn a total of  3,412  from holding Delta Manufacturing Limited or generate 47.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.81%
Values	Daily Returns

Sarthak Metals Limited  vs.  Delta Manufacturing Limited

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 inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Delta Manufacturing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Manufacturing Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Delta Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and Delta Manufacturing

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

The idea behind Sarthak Metals Limited and Delta Manufacturing 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.