Correlation Between Apollo Tyres and Syrma SGS

Can any of the company-specific risk be diversified away by investing in both Apollo Tyres and Syrma SGS 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 Apollo Tyres and Syrma SGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Tyres Limited and Syrma SGS Technology, you can compare the effects of market volatilities on Apollo Tyres and Syrma SGS 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 Apollo Tyres with a short position of Syrma SGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Tyres and Syrma SGS.

Diversification Opportunities for Apollo Tyres and Syrma SGS

0.45

Correlation Coefficient

Apollo Tyres  Syrma SGS

Very weak diversification

The 3 months correlation between Apollo and Syrma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Tyres Limited and Syrma SGS Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrma SGS Technology and Apollo Tyres 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 Apollo Tyres Limited are associated (or correlated) with Syrma SGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrma SGS Technology has no effect on the direction of Apollo Tyres i.e., Apollo Tyres and Syrma SGS go up and down completely randomly.

Pair Corralation between Apollo Tyres and Syrma SGS

Assuming the 90 days trading horizon Apollo Tyres Limited is expected to generate 0.48 times more return on investment than Syrma SGS. However, Apollo Tyres Limited is 2.1 times less risky than Syrma SGS. It trades about -0.66 of its potential returns per unit of risk. Syrma SGS Technology is currently generating about -0.34 per unit of risk. If you would invest  53,480  in Apollo Tyres Limited on October 26, 2024 and sell it today you would lose (11,155) from holding Apollo Tyres Limited or give up 20.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Apollo Tyres Limited  vs.  Syrma SGS Technology

Apollo Tyres Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Tyres Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Syrma SGS Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Syrma SGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apollo Tyres and Syrma SGS

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

The idea behind Apollo Tyres Limited and Syrma SGS Technology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.