Correlation Between Iridium Communications and Sify Technologies

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

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

Diversification Opportunities for Iridium Communications and Sify Technologies

0.33

Correlation Coefficient

Iridium Communications  Sify Technologies

Weak diversification

The 3 months correlation between Iridium and Sify is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Sify Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sify Technologies and Iridium Communications 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 Iridium Communications are associated (or correlated) with Sify Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sify Technologies has no effect on the direction of Iridium Communications i.e., Iridium Communications and Sify Technologies go up and down completely randomly.

Pair Corralation between Iridium Communications and Sify Technologies

Given the investment horizon of 90 days Iridium Communications is expected to generate 9.66 times less return on investment than Sify Technologies. But when comparing it to its historical volatility, Iridium Communications is 1.62 times less risky than Sify Technologies. It trades about 0.03 of its potential returns per unit of risk. Sify Technologies Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  289.00  in Sify Technologies Limited on December 28, 2024 and sell it today you would earn a total of  138.00  from holding Sify Technologies Limited or generate 47.75% return on investment over 90 days.

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

Iridium Communications  vs.  Sify Technologies Limited

Iridium Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Sify Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sify Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Sify Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and Sify Technologies

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

The idea behind Iridium Communications and Sify Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.