Correlation Between Sarthak Metals and Kalyani Steels

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

Diversification Opportunities for Sarthak Metals and Kalyani Steels

-0.26

Correlation Coefficient

Sarthak Metals  Kalyani Steels

Very good diversification

The 3 months correlation between Sarthak and Kalyani is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Kalyani Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Steels 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 Kalyani Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Steels has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Kalyani Steels go up and down completely randomly.

Pair Corralation between Sarthak Metals and Kalyani Steels

Assuming the 90 days trading horizon Sarthak Metals is expected to generate 3.26 times less return on investment than Kalyani Steels. In addition to that, Sarthak Metals is 1.19 times more volatile than Kalyani Steels Limited. It trades about 0.03 of its total potential returns per unit of risk. Kalyani Steels Limited is currently generating about 0.1 per unit of volatility. If you would invest  35,704  in Kalyani Steels Limited on September 29, 2024 and sell it today you would earn a total of  79,011  from holding Kalyani Steels Limited or generate 221.29% return on investment over 90 days.

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

Sarthak Metals Limited  vs.  Kalyani Steels 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 inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kalyani Steels

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarthak Metals and Kalyani Steels

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

The idea behind Sarthak Metals Limited and Kalyani Steels 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.