Correlation Between Sarthak Metals and Taj GVK

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

Diversification Opportunities for Sarthak Metals and Taj GVK

-0.47

Correlation Coefficient

Sarthak Metals  Taj GVK

Very good diversification

The 3 months correlation between Sarthak and Taj is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Taj GVK Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taj GVK 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 Taj GVK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taj GVK Hotels has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Taj GVK go up and down completely randomly.

Pair Corralation between Sarthak Metals and Taj GVK

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 4.56 times less return on investment than Taj GVK. But when comparing it to its historical volatility, Sarthak Metals Limited is 1.58 times less risky than Taj GVK. It trades about 0.08 of its potential returns per unit of risk. Taj GVK Hotels is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  36,210  in Taj GVK Hotels on October 8, 2024 and sell it today you would earn a total of  8,350  from holding Taj GVK Hotels or generate 23.06% 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.  Taj GVK Hotels

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.

Taj GVK Hotels

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and Taj GVK

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

The idea behind Sarthak Metals Limited and Taj GVK Hotels 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.