Correlation Between Generic Engineering and Silgo Retail

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

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

Diversification Opportunities for Generic Engineering and Silgo Retail

0.02

Correlation Coefficient

Generic Engineering  Silgo Retail

Significant diversification

The 3 months correlation between Generic and Silgo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi 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 Generic Engineering 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 Generic Engineering Construction 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 Generic Engineering i.e., Generic Engineering and Silgo Retail go up and down completely randomly.

Pair Corralation between Generic Engineering and Silgo Retail

Assuming the 90 days trading horizon Generic Engineering Construction is expected to under-perform the Silgo Retail. But the stock apears to be less risky and, when comparing its historical volatility, Generic Engineering Construction is 1.45 times less risky than Silgo Retail. The stock trades about -0.1 of its potential returns per unit of risk. The Silgo Retail Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,702  in Silgo Retail Limited on October 4, 2024 and sell it today you would earn a total of  28.00  from holding Silgo Retail Limited or generate 0.76% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Silgo Retail Limited

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering 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 latest uncertain performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Generic Engineering and Silgo Retail

The main advantage of trading using opposite Generic Engineering and Silgo Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Engineering 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 Generic Engineering Construction 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.