Correlation Between INDIKA ENERGY and SIMCERE PHARMAC

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

By analyzing existing cross correlation between INDIKA ENERGY and SIMCERE PHARMAC GRP, you can compare the effects of market volatilities on INDIKA ENERGY and SIMCERE PHARMAC 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 INDIKA ENERGY with a short position of SIMCERE PHARMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIKA ENERGY and SIMCERE PHARMAC.

Diversification Opportunities for INDIKA ENERGY and SIMCERE PHARMAC

-0.45

Correlation Coefficient

INDIKA ENERGY  SIMCERE PHARMAC

Very good diversification

The 3 months correlation between INDIKA and SIMCERE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and SIMCERE PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMCERE PHARMAC GRP and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with SIMCERE PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMCERE PHARMAC GRP has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and SIMCERE PHARMAC go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and SIMCERE PHARMAC

Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the SIMCERE PHARMAC. In addition to that, INDIKA ENERGY is 1.13 times more volatile than SIMCERE PHARMAC GRP. It trades about -0.09 of its total potential returns per unit of risk. SIMCERE PHARMAC GRP is currently generating about 0.08 per unit of volatility. If you would invest  72.00  in SIMCERE PHARMAC GRP on September 26, 2024 and sell it today you would earn a total of  9.00  from holding SIMCERE PHARMAC GRP or generate 12.5% return on investment over 90 days.

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

INDIKA ENERGY  vs.  SIMCERE PHARMAC GRP

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

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

SIMCERE PHARMAC GRP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIMCERE PHARMAC GRP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIMCERE PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INDIKA ENERGY and SIMCERE PHARMAC

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

The idea behind INDIKA ENERGY and SIMCERE PHARMAC GRP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.