Correlation Between Sukhjit Starch and Malu Paper

Can any of the company-specific risk be diversified away by investing in both Sukhjit Starch and Malu Paper 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 Malu Paper 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 Malu Paper Mills, you can compare the effects of market volatilities on Sukhjit Starch and Malu Paper 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 Malu Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sukhjit Starch and Malu Paper.

Diversification Opportunities for Sukhjit Starch and Malu Paper

0.36

Correlation Coefficient

Sukhjit Starch  Malu Paper

Weak diversification

The 3 months correlation between Sukhjit and Malu is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sukhjit Starch Chemicals and Malu Paper Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malu Paper Mills 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 Malu Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malu Paper Mills has no effect on the direction of Sukhjit Starch i.e., Sukhjit Starch and Malu Paper go up and down completely randomly.

Pair Corralation between Sukhjit Starch and Malu Paper

Assuming the 90 days trading horizon Sukhjit Starch Chemicals is expected to under-perform the Malu Paper. In addition to that, Sukhjit Starch is 1.91 times more volatile than Malu Paper Mills. It trades about -0.32 of its total potential returns per unit of risk. Malu Paper Mills is currently generating about -0.2 per unit of volatility. If you would invest  4,860  in Malu Paper Mills on October 8, 2024 and sell it today you would lose (209.00) from holding Malu Paper Mills or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sukhjit Starch Chemicals  vs.  Malu Paper Mills

Sukhjit Starch Chemicals

Risk-Adjusted Performance

0 of 100

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 comparatively stable forward indicators, Sukhjit Starch is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Malu Paper Mills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malu Paper Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Malu Paper is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sukhjit Starch and Malu Paper

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

The idea behind Sukhjit Starch Chemicals and Malu Paper Mills 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.