Correlation Between Sarthak Metals and V Mart

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

Diversification Opportunities for Sarthak Metals and V Mart

0.74

Correlation Coefficient

Sarthak Metals  V Mart

Poor diversification

The 3 months correlation between Sarthak and VMART is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and V Mart go up and down completely randomly.

Pair Corralation between Sarthak Metals and V Mart

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the V Mart. In addition to that, Sarthak Metals is 1.17 times more volatile than V Mart Retail Limited. It trades about -0.08 of its total potential returns per unit of risk. V Mart Retail Limited is currently generating about 0.0 per unit of volatility. If you would invest  393,730  in V Mart Retail Limited on September 25, 2024 and sell it today you would lose (8,040) from holding V Mart Retail Limited or give up 2.04% of portfolio value over 90 days.

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

Sarthak Metals Limited  vs.  V Mart Retail 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.

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sarthak Metals and V Mart

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

The idea behind Sarthak Metals Limited and V Mart Retail 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.