Correlation Between Sarthak Metals and Gillette India

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

Diversification Opportunities for Sarthak Metals and Gillette India

-0.46

Correlation Coefficient

Sarthak Metals  Gillette India

Very good diversification

The 3 months correlation between Sarthak and Gillette is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Gillette India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gillette India 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 Gillette India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gillette India has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Gillette India go up and down completely randomly.

Pair Corralation between Sarthak Metals and Gillette India

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 1.51 times less return on investment than Gillette India. In addition to that, Sarthak Metals is 1.91 times more volatile than Gillette India Limited. It trades about 0.03 of its total potential returns per unit of risk. Gillette India Limited is currently generating about 0.08 per unit of volatility. If you would invest  493,561  in Gillette India Limited on September 28, 2024 and sell it today you would earn a total of  445,659  from holding Gillette India Limited or generate 90.29% return on investment over 90 days.

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

Sarthak Metals Limited  vs.  Gillette India 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.

Gillette India

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gillette India Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gillette India unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and Gillette India

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

The idea behind Sarthak Metals Limited and Gillette India 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.