Correlation Between Sukhjit Starch and Ankit Metal

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

By analyzing existing cross correlation between Sukhjit Starch Chemicals and Ankit Metal Power, you can compare the effects of market volatilities on Sukhjit Starch and Ankit Metal 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 Sukhjit Starch with a short position of Ankit Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sukhjit Starch and Ankit Metal.

Diversification Opportunities for Sukhjit Starch and Ankit Metal

0.11

Correlation Coefficient

Sukhjit Starch  Ankit Metal

Average diversification

The 3 months correlation between Sukhjit and Ankit is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sukhjit Starch Chemicals and Ankit Metal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankit Metal Power and Sukhjit Starch 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 Sukhjit Starch Chemicals are associated (or correlated) with Ankit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankit Metal Power has no effect on the direction of Sukhjit Starch i.e., Sukhjit Starch and Ankit Metal go up and down completely randomly.

Pair Corralation between Sukhjit Starch and Ankit Metal

Assuming the 90 days trading horizon Sukhjit Starch Chemicals is expected to under-perform the Ankit Metal. But the stock apears to be less risky and, when comparing its historical volatility, Sukhjit Starch Chemicals is 1.15 times less risky than Ankit Metal. The stock trades about -0.04 of its potential returns per unit of risk. The Ankit Metal Power is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  346.00  in Ankit Metal Power on October 9, 2024 and sell it today you would earn a total of  92.00  from holding Ankit Metal Power or generate 26.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sukhjit Starch Chemicals  vs.  Ankit Metal Power

Sukhjit Starch Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sukhjit Starch Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ankit Metal Power

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ankit Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sukhjit Starch and Ankit Metal

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

The idea behind Sukhjit Starch Chemicals and Ankit Metal Power 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.