Correlation Between Edelweiss Financial and SIS

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

By analyzing existing cross correlation between Edelweiss Financial Services and SIS LIMITED, you can compare the effects of market volatilities on Edelweiss Financial and SIS 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 Edelweiss Financial with a short position of SIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edelweiss Financial and SIS.

Diversification Opportunities for Edelweiss Financial and SIS

-0.07

Correlation Coefficient

Edelweiss Financial  SIS

Good diversification

The 3 months correlation between Edelweiss and SIS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Edelweiss Financial Services and SIS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIS LIMITED and Edelweiss Financial 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 Edelweiss Financial Services are associated (or correlated) with SIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIS LIMITED has no effect on the direction of Edelweiss Financial i.e., Edelweiss Financial and SIS go up and down completely randomly.

Pair Corralation between Edelweiss Financial and SIS

Assuming the 90 days trading horizon Edelweiss Financial Services is expected to generate 2.28 times more return on investment than SIS. However, Edelweiss Financial is 2.28 times more volatile than SIS LIMITED. It trades about 0.03 of its potential returns per unit of risk. SIS LIMITED is currently generating about -0.17 per unit of risk. If you would invest  10,882  in Edelweiss Financial Services on October 26, 2024 and sell it today you would earn a total of  253.00  from holding Edelweiss Financial Services or generate 2.32% return on investment over 90 days.

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

Edelweiss Financial Services  vs.  SIS LIMITED

Edelweiss Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edelweiss Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Edelweiss Financial is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

SIS LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Edelweiss Financial and SIS

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

The idea behind Edelweiss Financial Services and SIS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..