Correlation Between Vodafone Idea and SEPC

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

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

Diversification Opportunities for Vodafone Idea and SEPC

0.07

Correlation Coefficient

Vodafone Idea  SEPC

Significant diversification

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

Pair Corralation between Vodafone Idea and SEPC

Assuming the 90 days trading horizon Vodafone Idea Limited is expected to generate 0.73 times more return on investment than SEPC. However, Vodafone Idea Limited is 1.37 times less risky than SEPC. It trades about 0.03 of its potential returns per unit of risk. SEPC Limited is currently generating about -0.1 per unit of risk. If you would invest  747.00  in Vodafone Idea Limited on December 23, 2024 and sell it today you would earn a total of  15.00  from holding Vodafone Idea Limited or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Vodafone Idea Limited  vs.  SEPC Limited

Vodafone Idea Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Idea Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vodafone Idea is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SEPC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEPC 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vodafone Idea and SEPC

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

The idea behind Vodafone Idea Limited and SEPC 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.