Correlation Between Consolidated Construction and Silgo Retail
Can any of the company-specific risk be diversified away by investing in both Consolidated Construction 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 Consolidated Construction and Silgo Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Construction Consortium and Silgo Retail Limited, you can compare the effects of market volatilities on Consolidated Construction 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 Consolidated Construction with a short position of Silgo Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Silgo Retail.
Diversification Opportunities for Consolidated Construction and Silgo Retail
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consolidated and Silgo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons 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 Consolidated Construction 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 Consolidated Construction Consortium 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 Consolidated Construction i.e., Consolidated Construction and Silgo Retail go up and down completely randomly.
Pair Corralation between Consolidated Construction and Silgo Retail
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to under-perform the Silgo Retail. But the stock apears to be less risky and, when comparing its historical volatility, Consolidated Construction Consortium is 1.46 times less risky than Silgo Retail. The stock trades about -0.27 of its potential returns per unit of risk. The Silgo Retail Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,327 in Silgo Retail Limited on October 8, 2024 and sell it today you would lose (472.00) from holding Silgo Retail Limited or give up 10.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Consolidated Construction Cons vs. Silgo Retail Limited
Performance |
Timeline |
Consolidated Construction |
Silgo Retail Limited |
Consolidated Construction and Silgo Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Consolidated Construction and Silgo Retail
The main advantage of trading using opposite Consolidated Construction and Silgo Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction 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 Consolidated Construction Consortium 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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