Correlation Between Sarthak Metals and Life Insurance

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

Diversification Opportunities for Sarthak Metals and Life Insurance

0.22

Correlation Coefficient

Sarthak Metals  Life Insurance

Modest diversification

The 3 months correlation between Sarthak and Life is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance 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 Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Life Insurance go up and down completely randomly.

Pair Corralation between Sarthak Metals and Life Insurance

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Life Insurance. In addition to that, Sarthak Metals is 1.69 times more volatile than Life Insurance. It trades about -0.25 of its total potential returns per unit of risk. Life Insurance is currently generating about 0.14 per unit of volatility. If you would invest  92,375  in Life Insurance on September 5, 2024 and sell it today you would earn a total of  4,600  from holding Life Insurance or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sarthak Metals Limited  vs.  Life Insurance

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.

Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with Sarthak Metals and Life Insurance

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

The idea behind Sarthak Metals Limited and Life Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.