Correlation Between SRI TRANG and Union Petrochemical

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

By analyzing existing cross correlation between SRI TRANG GLOVES and Union Petrochemical Public, you can compare the effects of market volatilities on SRI TRANG and Union Petrochemical 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 SRI TRANG with a short position of Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SRI TRANG and Union Petrochemical.

Diversification Opportunities for SRI TRANG and Union Petrochemical

-0.31

Correlation Coefficient

SRI TRANG  Union Petrochemical

Very good diversification

The 3 months correlation between SRI and Union is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SRI TRANG GLOVES and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical and SRI TRANG 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 SRI TRANG GLOVES are associated (or correlated) with Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of SRI TRANG i.e., SRI TRANG and Union Petrochemical go up and down completely randomly.

Pair Corralation between SRI TRANG and Union Petrochemical

Assuming the 90 days trading horizon SRI TRANG GLOVES is expected to under-perform the Union Petrochemical. But the stock apears to be less risky and, when comparing its historical volatility, SRI TRANG GLOVES is 4.1 times less risky than Union Petrochemical. The stock trades about -0.18 of its potential returns per unit of risk. The Union Petrochemical Public is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Union Petrochemical Public on December 24, 2024 and sell it today you would lose (7.00) from holding Union Petrochemical Public or give up 11.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SRI TRANG GLOVES  vs.  Union Petrochemical Public

SRI TRANG GLOVES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SRI TRANG GLOVES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Union Petrochemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Petrochemical Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Union Petrochemical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SRI TRANG and Union Petrochemical

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

The idea behind SRI TRANG GLOVES and Union Petrochemical Public 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.