Correlation Between Hisar Metal and Sarthak Metals

Can any of the company-specific risk be diversified away by investing in both Hisar Metal 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 Hisar Metal and Sarthak Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hisar Metal Industries and Sarthak Metals Limited, you can compare the effects of market volatilities on Hisar Metal 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 Hisar Metal with a short position of Sarthak Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisar Metal and Sarthak Metals.

Diversification Opportunities for Hisar Metal and Sarthak Metals

0.13

Correlation Coefficient

Hisar Metal  Sarthak Metals

Average diversification

The 3 months correlation between Hisar and Sarthak is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals and Hisar Metal 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 Hisar Metal Industries 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 Hisar Metal i.e., Hisar Metal and Sarthak Metals go up and down completely randomly.

Pair Corralation between Hisar Metal and Sarthak Metals

Assuming the 90 days trading horizon Hisar Metal is expected to generate 66.59 times less return on investment than Sarthak Metals. But when comparing it to its historical volatility, Hisar Metal Industries is 1.99 times less risky than Sarthak Metals. It trades about 0.0 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11,344  in Sarthak Metals Limited on March 25, 2025 and sell it today you would earn a total of  1,325  from holding Sarthak Metals Limited or generate 11.68% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Sarthak Metals Limited

Hisar Metal Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hisar Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sarthak Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sarthak Metals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Sarthak Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisar Metal and Sarthak Metals

The main advantage of trading using opposite Hisar Metal and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisar Metal 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.

The idea behind Hisar Metal Industries and Sarthak Metals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.