Correlation Between Bharti Airtel and Silgo Retail

Can any of the company-specific risk be diversified away by investing in both Bharti Airtel and Silgo Retail 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 Bharti Airtel and Silgo Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharti Airtel Limited and Silgo Retail Limited, you can compare the effects of market volatilities on Bharti Airtel and Silgo Retail 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 Bharti Airtel with a short position of Silgo Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Silgo Retail.

Diversification Opportunities for Bharti Airtel and Silgo Retail

0.19

Correlation Coefficient

Bharti Airtel  Silgo Retail

Average diversification

The 3 months correlation between Bharti and Silgo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited and Bharti Airtel 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 Bharti Airtel Limited are associated (or correlated) with Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Bharti Airtel i.e., Bharti Airtel and Silgo Retail go up and down completely randomly.

Pair Corralation between Bharti Airtel and Silgo Retail

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 0.31 times more return on investment than Silgo Retail. However, Bharti Airtel Limited is 3.18 times less risky than Silgo Retail. It trades about 0.13 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about 0.03 per unit of risk. If you would invest  78,490  in Bharti Airtel Limited on October 25, 2024 and sell it today you would earn a total of  84,685  from holding Bharti Airtel Limited or generate 107.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Bharti Airtel Limited  vs.  Silgo Retail Limited

Bharti Airtel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bharti Airtel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Silgo Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silgo Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bharti Airtel and Silgo Retail

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

The idea behind Bharti Airtel Limited and Silgo Retail 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.