Correlation Between Sarthak Metals and Garware Hi

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

Diversification Opportunities for Sarthak Metals and Garware Hi

-0.51

Correlation Coefficient

Sarthak Metals  Garware Hi

Excellent diversification

The 3 months correlation between Sarthak and Garware is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech 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 Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Garware Hi go up and down completely randomly.

Pair Corralation between Sarthak Metals and Garware Hi

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 2.17 times less return on investment than Garware Hi. In addition to that, Sarthak Metals is 1.03 times more volatile than Garware Hi Tech Films. It trades about 0.11 of its total potential returns per unit of risk. Garware Hi Tech Films is currently generating about 0.25 per unit of volatility. If you would invest  465,910  in Garware Hi Tech Films on September 20, 2024 and sell it today you would earn a total of  54,760  from holding Garware Hi Tech Films or generate 11.75% return on investment over 90 days.

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

Sarthak Metals Limited  vs.  Garware Hi Tech Films

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.

Garware Hi Tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and Garware Hi

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

The idea behind Sarthak Metals Limited and Garware Hi Tech Films 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.