Correlation Between Sumeet Industries and Indian Oil

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

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

Diversification Opportunities for Sumeet Industries and Indian Oil

-0.82

Correlation Coefficient

Sumeet Industries  Indian Oil

Pay attention - limited upside

The 3 months correlation between Sumeet and Indian is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sumeet Industries Limited and Indian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Oil and Sumeet Industries 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 Sumeet Industries Limited are associated (or correlated) with Indian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Oil has no effect on the direction of Sumeet Industries i.e., Sumeet Industries and Indian Oil go up and down completely randomly.

Pair Corralation between Sumeet Industries and Indian Oil

If you would invest  9,780  in Sumeet Industries Limited on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Sumeet Industries Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Sumeet Industries Limited  vs.  Indian Oil

Sumeet Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sumeet Industries Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Sumeet Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Indian Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sumeet Industries and Indian Oil

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

The idea behind Sumeet Industries Limited and Indian Oil 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.