Correlation Between Sarthak Metals and Oriental Hotels

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

Diversification Opportunities for Sarthak Metals and Oriental Hotels

-0.4

Correlation Coefficient

Sarthak Metals  Oriental Hotels

Very good diversification

The 3 months correlation between Sarthak and Oriental is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels 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 Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Oriental Hotels go up and down completely randomly.

Pair Corralation between Sarthak Metals and Oriental Hotels

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Oriental Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Sarthak Metals Limited is 1.02 times less risky than Oriental Hotels. The stock trades about -0.04 of its potential returns per unit of risk. The Oriental Hotels Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,192  in Oriental Hotels Limited on September 21, 2024 and sell it today you would earn a total of  5,355  from holding Oriental Hotels Limited or generate 40.59% 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.  Oriental Hotels 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 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.

Oriental Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Hotels Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Oriental Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sarthak Metals and Oriental Hotels

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

The idea behind Sarthak Metals Limited and Oriental Hotels 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.