Correlation Between ILFS Investment and Teamlease Services

Can any of the company-specific risk be diversified away by investing in both ILFS Investment and Teamlease Services 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 Teamlease Services 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 Teamlease Services Limited, you can compare the effects of market volatilities on ILFS Investment and Teamlease Services 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 Teamlease Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of ILFS Investment and Teamlease Services.

Diversification Opportunities for ILFS Investment and Teamlease Services

0.2

Correlation Coefficient

ILFS Investment  Teamlease Services

Modest diversification

The 3 months correlation between ILFS and Teamlease is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Teamlease Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teamlease Services 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 Teamlease Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teamlease Services has no effect on the direction of ILFS Investment i.e., ILFS Investment and Teamlease Services go up and down completely randomly.

Pair Corralation between ILFS Investment and Teamlease Services

Assuming the 90 days trading horizon ILFS Investment Managers is expected to under-perform the Teamlease Services. In addition to that, ILFS Investment is 1.16 times more volatile than Teamlease Services Limited. It trades about -0.09 of its total potential returns per unit of risk. Teamlease Services Limited is currently generating about 0.17 per unit of volatility. If you would invest  268,870  in Teamlease Services Limited on October 6, 2024 and sell it today you would earn a total of  36,235  from holding Teamlease Services Limited or generate 13.48% return on investment over 90 days.

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

ILFS Investment Managers  vs.  Teamlease Services 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 rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Teamlease Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teamlease Services Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Teamlease Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ILFS Investment and Teamlease Services

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

The idea behind ILFS Investment Managers and Teamlease Services 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.