Correlation Between Biofil Chemicals and Syrma SGS

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

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

Diversification Opportunities for Biofil Chemicals and Syrma SGS

-0.49

Correlation Coefficient

Biofil Chemicals  Syrma SGS

Very good diversification

The 3 months correlation between Biofil and Syrma is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica 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 Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals 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 Biofil Chemicals i.e., Biofil Chemicals and Syrma SGS go up and down completely randomly.

Pair Corralation between Biofil Chemicals and Syrma SGS

Assuming the 90 days trading horizon Biofil Chemicals is expected to generate 8.03 times less return on investment than Syrma SGS. In addition to that, Biofil Chemicals is 1.15 times more volatile than Syrma SGS Technology. It trades about 0.01 of its total potential returns per unit of risk. Syrma SGS Technology is currently generating about 0.13 per unit of volatility. If you would invest  43,416  in Syrma SGS Technology on September 3, 2024 and sell it today you would earn a total of  13,199  from holding Syrma SGS Technology or generate 30.4% return on investment over 90 days.

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

Biofil Chemicals Pharmaceutica  vs.  Syrma SGS Technology

Biofil Chemicals Pha

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofil Chemicals Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Biofil Chemicals is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Syrma SGS Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biofil Chemicals and Syrma SGS

The main advantage of trading using opposite Biofil Chemicals and Syrma SGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.