Correlation Between Industrial Investment and SEPC

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

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

Diversification Opportunities for Industrial Investment and SEPC

-0.54

Correlation Coefficient

Industrial Investment  SEPC

Excellent diversification

The 3 months correlation between Industrial and SEPC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and SEPC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEPC Limited and Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and SEPC go up and down completely randomly.

Pair Corralation between Industrial Investment and SEPC

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.89 times more return on investment than SEPC. However, Industrial Investment Trust is 1.13 times less risky than SEPC. It trades about 0.08 of its potential returns per unit of risk. SEPC Limited is currently generating about 0.04 per unit of risk. If you would invest  10,545  in Industrial Investment Trust on October 11, 2024 and sell it today you would earn a total of  19,120  from holding Industrial Investment Trust or generate 181.32% return on investment over 90 days.

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

Industrial Investment Trust  vs.  SEPC Limited

Industrial Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Industrial Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SEPC Limited

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Industrial Investment and SEPC

The main advantage of trading using opposite Industrial Investment and SEPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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 Industrial Investment Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.