Correlation Between ILFS Investment and V Mart

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

Diversification Opportunities for ILFS Investment and V Mart

0.19

Correlation Coefficient

ILFS Investment  V Mart

Average diversification

The 3 months correlation between ILFS and VMART is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of ILFS Investment i.e., ILFS Investment and V Mart go up and down completely randomly.

Pair Corralation between ILFS Investment and V Mart

Assuming the 90 days trading horizon ILFS Investment Managers is expected to under-perform the V Mart. But the stock apears to be less risky and, when comparing its historical volatility, ILFS Investment Managers is 1.17 times less risky than V Mart. The stock trades about -0.02 of its potential returns per unit of risk. The V Mart Retail Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  398,770  in V Mart Retail Limited on September 21, 2024 and sell it today you would lose (14,360) from holding V Mart Retail Limited or give up 3.6% of portfolio value over 90 days.

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

ILFS Investment Managers  vs.  V Mart Retail 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

V Mart Retail

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ILFS Investment and V Mart

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

The idea behind ILFS Investment Managers and V Mart Retail 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.