Correlation Between UPL and Sukhjit Starch

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

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

Diversification Opportunities for UPL and Sukhjit Starch

-0.84

Correlation Coefficient

UPL  Sukhjit Starch

Pay attention - limited upside

The 3 months correlation between UPL and Sukhjit is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding UPL Limited and Sukhjit Starch Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sukhjit Starch Chemicals and UPL 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 UPL Limited are associated (or correlated) with Sukhjit Starch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sukhjit Starch Chemicals has no effect on the direction of UPL i.e., UPL and Sukhjit Starch go up and down completely randomly.

Pair Corralation between UPL and Sukhjit Starch

Assuming the 90 days trading horizon UPL Limited is expected to generate 0.74 times more return on investment than Sukhjit Starch. However, UPL Limited is 1.34 times less risky than Sukhjit Starch. It trades about 0.23 of its potential returns per unit of risk. Sukhjit Starch Chemicals is currently generating about -0.19 per unit of risk. If you would invest  50,450  in UPL Limited on December 24, 2024 and sell it today you would earn a total of  15,395  from holding UPL Limited or generate 30.52% return on investment over 90 days.

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

UPL Limited  vs.  Sukhjit Starch Chemicals

UPL Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UPL Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, UPL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sukhjit Starch Chemicals

Risk-Adjusted Performance

Very 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 uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with UPL and Sukhjit Starch

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

The idea behind UPL Limited and Sukhjit Starch Chemicals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.