Correlation Between Sumeet Industries and Nazara Technologies

Can any of the company-specific risk be diversified away by investing in both Sumeet Industries and Nazara Technologies 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 Nazara Technologies 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 Nazara Technologies Limited, you can compare the effects of market volatilities on Sumeet Industries and Nazara Technologies 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 Nazara Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumeet Industries and Nazara Technologies.

Diversification Opportunities for Sumeet Industries and Nazara Technologies

-0.09

Correlation Coefficient

Sumeet Industries  Nazara Technologies

Good diversification

The 3 months correlation between Sumeet and Nazara is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sumeet Industries Limited and Nazara Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nazara Technologies 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 Nazara Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nazara Technologies has no effect on the direction of Sumeet Industries i.e., Sumeet Industries and Nazara Technologies go up and down completely randomly.

Pair Corralation between Sumeet Industries and Nazara Technologies

Assuming the 90 days trading horizon Sumeet Industries is expected to generate 1.69 times less return on investment than Nazara Technologies. But when comparing it to its historical volatility, Sumeet Industries Limited is 3.0 times less risky than Nazara Technologies. It trades about 0.17 of its potential returns per unit of risk. Nazara Technologies Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  90,460  in Nazara Technologies Limited on October 7, 2024 and sell it today you would earn a total of  10,950  from holding Nazara Technologies Limited or generate 12.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Sumeet Industries Limited  vs.  Nazara Technologies Limited

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 weak basic indicators, Sumeet Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nazara Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nazara Technologies Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nazara Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sumeet Industries and Nazara Technologies

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

The idea behind Sumeet Industries Limited and Nazara Technologies Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.