Correlation Between Sarthak Metals and ICICI Lombard

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

Diversification Opportunities for Sarthak Metals and ICICI Lombard

0.55

Correlation Coefficient

Sarthak Metals  ICICI Lombard

Very weak diversification

The 3 months correlation between Sarthak and ICICI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and ICICI Lombard General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Lombard General 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 ICICI Lombard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Lombard General has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and ICICI Lombard go up and down completely randomly.

Pair Corralation between Sarthak Metals and ICICI Lombard

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to generate 1.83 times more return on investment than ICICI Lombard. However, Sarthak Metals is 1.83 times more volatile than ICICI Lombard General. It trades about 0.11 of its potential returns per unit of risk. ICICI Lombard General is currently generating about -0.02 per unit of risk. If you would invest  15,937  in Sarthak Metals Limited on October 25, 2024 and sell it today you would earn a total of  991.00  from holding Sarthak Metals Limited or generate 6.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sarthak Metals Limited  vs.  ICICI Lombard General

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

ICICI Lombard General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICICI Lombard General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, ICICI Lombard is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sarthak Metals and ICICI Lombard

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

The idea behind Sarthak Metals Limited and ICICI Lombard General 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 Anywhere module to track or share privately all of your investments from the convenience of any device.