Correlation Between DiGiSPICE Technologies and India Glycols

Can any of the company-specific risk be diversified away by investing in both DiGiSPICE Technologies and India Glycols 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 DiGiSPICE Technologies and India Glycols into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for DiGiSPICE Technologies and India Glycols

0.54

Correlation Coefficient

DiGiSPICE Technologies  India Glycols

Very weak diversification

The 3 months correlation between DiGiSPICE and India is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DiGiSPICE Technologies Limited and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited and DiGiSPICE Technologies 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 DiGiSPICE Technologies Limited are associated (or correlated) with India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of DiGiSPICE Technologies i.e., DiGiSPICE Technologies and India Glycols go up and down completely randomly.

Pair Corralation between DiGiSPICE Technologies and India Glycols

Assuming the 90 days trading horizon DiGiSPICE Technologies is expected to generate 1.7 times less return on investment than India Glycols. In addition to that, DiGiSPICE Technologies is 1.35 times more volatile than India Glycols Limited. It trades about 0.03 of its total potential returns per unit of risk. India Glycols Limited is currently generating about 0.06 per unit of volatility. If you would invest  69,605  in India Glycols Limited on October 11, 2024 and sell it today you would earn a total of  57,045  from holding India Glycols Limited or generate 81.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.18%
Values	Daily Returns

DiGiSPICE Technologies Limited  vs.  India Glycols Limited

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, DiGiSPICE Technologies is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

India Glycols Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Glycols Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with DiGiSPICE Technologies and India Glycols

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

The idea behind DiGiSPICE Technologies Limited and India Glycols 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.