Correlation Between ILFS Investment and Sasken Technologies

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

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

Diversification Opportunities for ILFS Investment and Sasken Technologies

-0.51

Correlation Coefficient

ILFS Investment  Sasken Technologies

Excellent diversification

The 3 months correlation between ILFS and Sasken is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Sasken Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasken Technologies and ILFS 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 ILFS Investment Managers are associated (or correlated) with Sasken Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasken Technologies has no effect on the direction of ILFS Investment i.e., ILFS Investment and Sasken Technologies go up and down completely randomly.

Pair Corralation between ILFS Investment and Sasken Technologies

Assuming the 90 days trading horizon ILFS Investment Managers is expected to under-perform the Sasken Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ILFS Investment Managers is 1.4 times less risky than Sasken Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Sasken Technologies Limited is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  172,895  in Sasken Technologies Limited on September 5, 2024 and sell it today you would earn a total of  47,760  from holding Sasken Technologies Limited or generate 27.62% return on investment over 90 days.

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

ILFS Investment Managers  vs.  Sasken Technologies Limited

ILFS Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ILFS Investment Managers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sasken Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ILFS Investment and Sasken Technologies

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

The idea behind ILFS Investment Managers and Sasken 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.