Correlation Between RHI MAGNESITA and Sakar Healthcare
Can any of the company-specific risk be diversified away by investing in both RHI MAGNESITA and Sakar Healthcare 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 RHI MAGNESITA and Sakar Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RHI MAGNESITA INDIA and Sakar Healthcare Limited, you can compare the effects of market volatilities on RHI MAGNESITA and Sakar Healthcare 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 RHI MAGNESITA with a short position of Sakar Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHI MAGNESITA and Sakar Healthcare.
Diversification Opportunities for RHI MAGNESITA and Sakar Healthcare
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RHI and Sakar is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding RHI MAGNESITA INDIA and Sakar Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sakar Healthcare and RHI MAGNESITA 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 RHI MAGNESITA INDIA are associated (or correlated) with Sakar Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sakar Healthcare has no effect on the direction of RHI MAGNESITA i.e., RHI MAGNESITA and Sakar Healthcare go up and down completely randomly.
Pair Corralation between RHI MAGNESITA and Sakar Healthcare
Assuming the 90 days trading horizon RHI MAGNESITA INDIA is expected to under-perform the Sakar Healthcare. In addition to that, RHI MAGNESITA is 1.07 times more volatile than Sakar Healthcare Limited. It trades about -0.37 of its total potential returns per unit of risk. Sakar Healthcare Limited is currently generating about -0.24 per unit of volatility. If you would invest 31,800 in Sakar Healthcare Limited on October 13, 2024 and sell it today you would lose (2,345) from holding Sakar Healthcare Limited or give up 7.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RHI MAGNESITA INDIA vs. Sakar Healthcare Limited
Performance |
| Timeline |
| RHI MAGNESITA INDIA |
| Sakar Healthcare |
RHI MAGNESITA and Sakar Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RHI MAGNESITA and Sakar Healthcare
The main advantage of trading using opposite RHI MAGNESITA and Sakar Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHI MAGNESITA position performs unexpectedly, Sakar Healthcare 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 Sakar Healthcare will offset losses from the drop in Sakar Healthcare's long position.| RHI MAGNESITA vs. Punjab Chemicals Crop | RHI MAGNESITA vs. Ratnamani Metals Tubes | RHI MAGNESITA vs. Omkar Speciality Chemicals | RHI MAGNESITA vs. Chembond Chemicals |
| Sakar Healthcare vs. Ratnamani Metals Tubes | Sakar Healthcare vs. Cholamandalam Investment and | Sakar Healthcare vs. LLOYDS METALS AND | Sakar Healthcare vs. The State Trading |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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