Correlation Between Spandana Sphoorty and Electrosteel Castings

Can any of the company-specific risk be diversified away by investing in both Spandana Sphoorty and Electrosteel Castings 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 Spandana Sphoorty and Electrosteel Castings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spandana Sphoorty Financial and Electrosteel Castings Limited, you can compare the effects of market volatilities on Spandana Sphoorty and Electrosteel Castings 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 Spandana Sphoorty with a short position of Electrosteel Castings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spandana Sphoorty and Electrosteel Castings.

Diversification Opportunities for Spandana Sphoorty and Electrosteel Castings

-0.08

Correlation Coefficient

Spandana Sphoorty  Electrosteel Castings

Good diversification

The 3 months correlation between Spandana and Electrosteel is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spandana Sphoorty Financial and Electrosteel Castings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrosteel Castings and Spandana Sphoorty 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 Spandana Sphoorty Financial are associated (or correlated) with Electrosteel Castings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrosteel Castings has no effect on the direction of Spandana Sphoorty i.e., Spandana Sphoorty and Electrosteel Castings go up and down completely randomly.

Pair Corralation between Spandana Sphoorty and Electrosteel Castings

Assuming the 90 days trading horizon Spandana Sphoorty is expected to generate 1.84 times less return on investment than Electrosteel Castings. But when comparing it to its historical volatility, Spandana Sphoorty Financial is 1.15 times less risky than Electrosteel Castings. It trades about 0.04 of its potential returns per unit of risk. Electrosteel Castings Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,368  in Electrosteel Castings Limited on April 25, 2025 and sell it today you would earn a total of  1,032  from holding Electrosteel Castings Limited or generate 9.95% return on investment over 90 days.

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

Spandana Sphoorty Financial  vs.  Electrosteel Castings Limited

Spandana Sphoorty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spandana Sphoorty Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Spandana Sphoorty may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Electrosteel Castings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrosteel Castings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrosteel Castings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Spandana Sphoorty and Electrosteel Castings

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

The idea behind Spandana Sphoorty Financial and Electrosteel Castings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.