Correlation Between PTC India and Sarthak Metals
Can any of the company-specific risk be diversified away by investing in both PTC India and Sarthak Metals 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 PTC India and Sarthak Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTC India Financial and Sarthak Metals Limited, you can compare the effects of market volatilities on PTC India and Sarthak Metals 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 PTC India with a short position of Sarthak Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC India and Sarthak Metals.
Diversification Opportunities for PTC India and Sarthak Metals
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PTC and Sarthak is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PTC India Financial and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and PTC India 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 PTC India Financial are associated (or correlated) with Sarthak Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarthak Metals has no effect on the direction of PTC India i.e., PTC India and Sarthak Metals go up and down completely randomly.
Pair Corralation between PTC India and Sarthak Metals
Assuming the 90 days trading horizon PTC India Financial is expected to generate 0.81 times more return on investment than Sarthak Metals. However, PTC India Financial is 1.24 times less risky than Sarthak Metals. It trades about 0.02 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.27 per unit of risk. If you would invest 4,348 in PTC India Financial on September 4, 2024 and sell it today you would earn a total of 15.00 from holding PTC India Financial or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PTC India Financial vs. Sarthak Metals Limited
Performance |
| Timeline |
| PTC India Financial |
| Sarthak Metals |
PTC India and Sarthak Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTC India and Sarthak Metals
The main advantage of trading using opposite PTC India and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTC India position performs unexpectedly, Sarthak Metals 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 Sarthak Metals will offset losses from the drop in Sarthak Metals' long position.| PTC India vs. Sarthak Metals Limited | PTC India vs. Syrma SGS Technology | PTC India vs. California Software | PTC India vs. Sintex Plastics Technology |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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