Correlation Between Sarthak Metals and Kewal Kiran

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

Diversification Opportunities for Sarthak Metals and Kewal Kiran

0.69

Correlation Coefficient

Sarthak Metals  Kewal Kiran

Poor diversification

The 3 months correlation between Sarthak and Kewal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing 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 Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Kewal Kiran go up and down completely randomly.

Pair Corralation between Sarthak Metals and Kewal Kiran

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Kewal Kiran. In addition to that, Sarthak Metals is 1.74 times more volatile than Kewal Kiran Clothing. It trades about -0.11 of its total potential returns per unit of risk. Kewal Kiran Clothing is currently generating about -0.11 per unit of volatility. If you would invest  63,880  in Kewal Kiran Clothing on October 1, 2024 and sell it today you would lose (4,300) from holding Kewal Kiran Clothing or give up 6.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Sarthak Metals Limited  vs.  Kewal Kiran Clothing

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 unsteady 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.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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 Kewal Kiran

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

The idea behind Sarthak Metals Limited and Kewal Kiran Clothing 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.