Correlation Between Sarthak Metals and General Insurance

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

Diversification Opportunities for Sarthak Metals and General Insurance

-0.13

Correlation Coefficient

Sarthak Metals  General Insurance

Good diversification

The 3 months correlation between Sarthak and General is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance 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 General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and General Insurance go up and down completely randomly.

Pair Corralation between Sarthak Metals and General Insurance

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 7.24 times less return on investment than General Insurance. But when comparing it to its historical volatility, Sarthak Metals Limited is 1.36 times less risky than General Insurance. It trades about 0.09 of its potential returns per unit of risk. General Insurance is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  36,650  in General Insurance on September 22, 2024 and sell it today you would earn a total of  13,450  from holding General Insurance or generate 36.7% return on investment over 90 days.

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

Sarthak Metals Limited  vs.  General Insurance

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

General Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and General Insurance

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

The idea behind Sarthak Metals Limited and General Insurance 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.