Correlation Between Sportking India and Zuari Agro

Can any of the company-specific risk be diversified away by investing in both Sportking India and Zuari Agro 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 Zuari Agro 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 Zuari Agro Chemicals, you can compare the effects of market volatilities on Sportking India and Zuari Agro 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 Zuari Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportking India and Zuari Agro.

Diversification Opportunities for Sportking India and Zuari Agro

0.37

Correlation Coefficient

Sportking India  Zuari Agro

Weak diversification

The 3 months correlation between Sportking and Zuari is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sportking India Limited and Zuari Agro Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuari Agro Chemicals 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 Zuari Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuari Agro Chemicals has no effect on the direction of Sportking India i.e., Sportking India and Zuari Agro go up and down completely randomly.

Pair Corralation between Sportking India and Zuari Agro

Assuming the 90 days trading horizon Sportking India Limited is expected to generate 31.45 times more return on investment than Zuari Agro. However, Sportking India is 31.45 times more volatile than Zuari Agro Chemicals. It trades about 0.09 of its potential returns per unit of risk. Zuari Agro Chemicals is currently generating about 0.04 per unit of risk. If you would invest  7,850  in Sportking India Limited on October 13, 2024 and sell it today you would earn a total of  1,800  from holding Sportking India Limited or generate 22.93% return on investment over 90 days.

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

Sportking India Limited  vs.  Zuari Agro Chemicals

Sportking India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Zuari Agro Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zuari Agro Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zuari Agro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sportking India and Zuari Agro

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

The idea behind Sportking India Limited and Zuari Agro Chemicals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.