Correlation Between Sasken Technologies and Prakash Steelage

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

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

Diversification Opportunities for Sasken Technologies and Prakash Steelage

-0.35

Correlation Coefficient

Sasken Technologies  Prakash Steelage

Very good diversification

The 3 months correlation between Sasken and Prakash is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sasken Technologies Limited and Prakash Steelage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prakash Steelage and Sasken Technologies 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 Sasken Technologies Limited are associated (or correlated) with Prakash Steelage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prakash Steelage has no effect on the direction of Sasken Technologies i.e., Sasken Technologies and Prakash Steelage go up and down completely randomly.

Pair Corralation between Sasken Technologies and Prakash Steelage

Assuming the 90 days trading horizon Sasken Technologies Limited is expected to under-perform the Prakash Steelage. But the stock apears to be less risky and, when comparing its historical volatility, Sasken Technologies Limited is 1.14 times less risky than Prakash Steelage. The stock trades about -0.01 of its potential returns per unit of risk. The Prakash Steelage Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  797.00  in Prakash Steelage Limited on September 22, 2024 and sell it today you would earn a total of  43.00  from holding Prakash Steelage Limited or generate 5.4% return on investment over 90 days.

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

Sasken Technologies Limited  vs.  Prakash Steelage Limited

Sasken Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Prakash Steelage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prakash Steelage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Prakash Steelage is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sasken Technologies and Prakash Steelage

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

The idea behind Sasken Technologies Limited and Prakash Steelage 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.