Correlation Between Sarthak Metals and Jindal Saw

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

Diversification Opportunities for Sarthak Metals and Jindal Saw

0.62

Correlation Coefficient

Sarthak Metals  Jindal Saw

Poor diversification

The 3 months correlation between Sarthak and Jindal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Jindal Saw Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Saw Limited 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 Jindal Saw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Saw Limited has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Jindal Saw go up and down completely randomly.

Pair Corralation between Sarthak Metals and Jindal Saw

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Jindal Saw. But the stock apears to be less risky and, when comparing its historical volatility, Sarthak Metals Limited is 2.17 times less risky than Jindal Saw. The stock trades about -0.02 of its potential returns per unit of risk. The Jindal Saw Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20,558  in Jindal Saw Limited on September 16, 2024 and sell it today you would earn a total of  11,617  from holding Jindal Saw Limited or generate 56.51% return on investment over 90 days.

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

Sarthak Metals Limited  vs.  Jindal Saw Limited

Sarthak Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sarthak Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Jindal Saw Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Saw Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sarthak Metals and Jindal Saw

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

The idea behind Sarthak Metals Limited and Jindal Saw 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.