Correlation Between Sumeet Industries and Suzlon Energy

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

Diversification Opportunities for Sumeet Industries and Suzlon Energy

-0.72

Correlation Coefficient

Sumeet Industries  Suzlon Energy

Pay attention - limited upside

The 3 months correlation between Sumeet and Suzlon is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sumeet Industries Limited and Suzlon Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzlon Energy Limited 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 Suzlon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzlon Energy Limited has no effect on the direction of Sumeet Industries i.e., Sumeet Industries and Suzlon Energy go up and down completely randomly.

Pair Corralation between Sumeet Industries and Suzlon Energy

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	Weak
Accuracy	95.0%
Values	Daily Returns

Sumeet Industries Limited  vs.  Suzlon Energy 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 unsteady basic indicators, Sumeet Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Suzlon Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sumeet Industries and Suzlon Energy

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

The idea behind Sumeet Industries Limited and Suzlon Energy 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.