Correlation Between Sarthak Metals and Bandhan Bank

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

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

Diversification Opportunities for Sarthak Metals and Bandhan Bank

0.47

Correlation Coefficient

Sarthak Metals  Bandhan Bank

Very weak diversification

The 3 months correlation between Sarthak and Bandhan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Bandhan Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bandhan Bank Limited and Sarthak Metals 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 Sarthak Metals Limited are associated (or correlated) with Bandhan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bandhan Bank Limited has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Bandhan Bank go up and down completely randomly.

Pair Corralation between Sarthak Metals and Bandhan Bank

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to generate 1.25 times more return on investment than Bandhan Bank. However, Sarthak Metals is 1.25 times more volatile than Bandhan Bank Limited. It trades about -0.03 of its potential returns per unit of risk. Bandhan Bank Limited is currently generating about -0.06 per unit of risk. If you would invest  17,785  in Sarthak Metals Limited on September 5, 2024 and sell it today you would lose (1,989) from holding Sarthak Metals Limited or give up 11.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Sarthak Metals Limited  vs.  Bandhan Bank Limited

Sarthak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarthak Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bandhan Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bandhan Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sarthak Metals and Bandhan Bank

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

The idea behind Sarthak Metals Limited and Bandhan Bank 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.