Correlation Between Indo Rama and Rajshree Sugars

Can any of the company-specific risk be diversified away by investing in both Indo Rama and Rajshree Sugars 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 Indo Rama and Rajshree Sugars into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Rama Synthetics and Rajshree Sugars Chemicals, you can compare the effects of market volatilities on Indo Rama and Rajshree Sugars 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 Indo Rama with a short position of Rajshree Sugars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Rama and Rajshree Sugars.

Diversification Opportunities for Indo Rama and Rajshree Sugars

0.71

Correlation Coefficient

Indo Rama  Rajshree Sugars

Poor diversification

The 3 months correlation between Indo and Rajshree is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Indo Rama Synthetics and Rajshree Sugars Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rajshree Sugars Chemicals and Indo Rama 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 Indo Rama Synthetics are associated (or correlated) with Rajshree Sugars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rajshree Sugars Chemicals has no effect on the direction of Indo Rama i.e., Indo Rama and Rajshree Sugars go up and down completely randomly.

Pair Corralation between Indo Rama and Rajshree Sugars

Assuming the 90 days trading horizon Indo Rama Synthetics is expected to generate 1.3 times more return on investment than Rajshree Sugars. However, Indo Rama is 1.3 times more volatile than Rajshree Sugars Chemicals. It trades about 0.18 of its potential returns per unit of risk. Rajshree Sugars Chemicals is currently generating about 0.14 per unit of risk. If you would invest  3,380  in Indo Rama Synthetics on April 7, 2025 and sell it today you would earn a total of  1,423  from holding Indo Rama Synthetics or generate 42.1% return on investment over 90 days.

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

Indo Rama Synthetics  vs.  Rajshree Sugars Chemicals

Indo Rama Synthetics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Rama Synthetics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Indo Rama displayed solid returns over the last few months and may actually be approaching a breakup point.

Rajshree Sugars Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rajshree Sugars Chemicals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Rajshree Sugars exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indo Rama and Rajshree Sugars

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

The idea behind Indo Rama Synthetics and Rajshree Sugars Chemicals 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.