Correlation Between Sarthak Metals and TATA CONSUMER

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

Diversification Opportunities for Sarthak Metals and TATA CONSUMER

-0.14

Correlation Coefficient

Sarthak Metals  TATA CONSUMER

Good diversification

The 3 months correlation between Sarthak and TATA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and TATA SUMER PRODUCTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TATA SUMER PRODUCTS 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 TATA CONSUMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TATA SUMER PRODUCTS has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and TATA CONSUMER go up and down completely randomly.

Pair Corralation between Sarthak Metals and TATA CONSUMER

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the TATA CONSUMER. In addition to that, Sarthak Metals is 2.39 times more volatile than TATA SUMER PRODUCTS. It trades about -0.14 of its total potential returns per unit of risk. TATA SUMER PRODUCTS is currently generating about 0.09 per unit of volatility. If you would invest  90,730  in TATA SUMER PRODUCTS on December 25, 2024 and sell it today you would earn a total of  6,315  from holding TATA SUMER PRODUCTS or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Sarthak Metals Limited  vs.  TATA SUMER PRODUCTS

Sarthak Metals

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TATA SUMER PRODUCTS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TATA SUMER PRODUCTS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, TATA CONSUMER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sarthak Metals and TATA CONSUMER

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

The idea behind Sarthak Metals Limited and TATA SUMER PRODUCTS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.