Correlation Between Sportking India and Unitech

Can any of the company-specific risk be diversified away by investing in both Sportking India and Unitech 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 Sportking India and Unitech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sportking India Limited and Unitech Limited, you can compare the effects of market volatilities on Sportking India and Unitech 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 Sportking India with a short position of Unitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportking India and Unitech.

Diversification Opportunities for Sportking India and Unitech

0.7

Correlation Coefficient

Sportking India  Unitech

Poor diversification

The 3 months correlation between Sportking and Unitech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sportking India Limited and Unitech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Limited and Sportking India 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 Sportking India Limited are associated (or correlated) with Unitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Limited has no effect on the direction of Sportking India i.e., Sportking India and Unitech go up and down completely randomly.

Pair Corralation between Sportking India and Unitech

Assuming the 90 days trading horizon Sportking India Limited is expected to generate 26.85 times more return on investment than Unitech. However, Sportking India is 26.85 times more volatile than Unitech Limited. It trades about 0.09 of its potential returns per unit of risk. Unitech Limited is currently generating about 0.12 per unit of risk. If you would invest  7,060  in Sportking India Limited on September 20, 2024 and sell it today you would earn a total of  4,634  from holding Sportking India Limited or generate 65.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Sportking India Limited  vs.  Unitech Limited

Sportking India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportking India Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Unitech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unitech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Sportking India and Unitech

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

The idea behind Sportking India Limited and Unitech 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.