Correlation Between Hindcon Chemicals and Silgo Retail

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

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

Diversification Opportunities for Hindcon Chemicals and Silgo Retail

0.57

Correlation Coefficient

Hindcon Chemicals  Silgo Retail

Very weak diversification

The 3 months correlation between Hindcon and Silgo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hindcon Chemicals Limited 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 Hindcon 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 Hindcon Chemicals Limited 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 Hindcon Chemicals i.e., Hindcon Chemicals and Silgo Retail go up and down completely randomly.

Pair Corralation between Hindcon Chemicals and Silgo Retail

Assuming the 90 days trading horizon Hindcon Chemicals Limited is expected to generate 1.38 times more return on investment than Silgo Retail. However, Hindcon Chemicals is 1.38 times more volatile than Silgo Retail Limited. It trades about -0.04 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about -0.16 per unit of risk. If you would invest  4,596  in Hindcon Chemicals Limited on October 26, 2024 and sell it today you would lose (562.00) from holding Hindcon Chemicals Limited or give up 12.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Hindcon Chemicals Limited  vs.  Silgo Retail Limited

Hindcon Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindcon Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hindcon Chemicals and Silgo Retail

The main advantage of trading using opposite Hindcon Chemicals and Silgo Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hindcon Chemicals 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 Hindcon Chemicals Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.