Correlation Between TATA SUMER and Radiant Cash

Can any of the company-specific risk be diversified away by investing in both TATA SUMER and Radiant Cash 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 TATA SUMER and Radiant Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TATA SUMER PRODUCTS and Radiant Cash Management, you can compare the effects of market volatilities on TATA SUMER and Radiant Cash 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 TATA SUMER with a short position of Radiant Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of TATA SUMER and Radiant Cash.

Diversification Opportunities for TATA SUMER and Radiant Cash

-0.19

Correlation Coefficient

TATA SUMER  Radiant Cash

Good diversification

The 3 months correlation between TATA and Radiant is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding TATA SUMER PRODUCTS and Radiant Cash Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Cash Management and TATA SUMER 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 TATA SUMER PRODUCTS are associated (or correlated) with Radiant Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Cash Management has no effect on the direction of TATA SUMER i.e., TATA SUMER and Radiant Cash go up and down completely randomly.

Pair Corralation between TATA SUMER and Radiant Cash

Assuming the 90 days trading horizon TATA SUMER PRODUCTS is expected to generate 1.1 times more return on investment than Radiant Cash. However, TATA SUMER is 1.1 times more volatile than Radiant Cash Management. It trades about 0.03 of its potential returns per unit of risk. Radiant Cash Management is currently generating about -0.04 per unit of risk. If you would invest  97,590  in TATA SUMER PRODUCTS on October 26, 2024 and sell it today you would earn a total of  1,690  from holding TATA SUMER PRODUCTS or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TATA SUMER PRODUCTS  vs.  Radiant Cash Management

TATA SUMER PRODUCTS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TATA SUMER PRODUCTS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TATA SUMER is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Radiant Cash Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Cash Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Radiant Cash is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TATA SUMER and Radiant Cash

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

The idea behind TATA SUMER PRODUCTS and Radiant Cash Management 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..