Correlation Between Kalyani Investment and SIL Investments

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

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

Diversification Opportunities for Kalyani Investment and SIL Investments

0.79

Correlation Coefficient

Kalyani Investment  SIL Investments

Poor diversification

The 3 months correlation between Kalyani and SIL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Investment and SIL Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIL Investments and Kalyani 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 Kalyani Investment are associated (or correlated) with SIL Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIL Investments has no effect on the direction of Kalyani Investment i.e., Kalyani Investment and SIL Investments go up and down completely randomly.

Pair Corralation between Kalyani Investment and SIL Investments

Assuming the 90 days trading horizon Kalyani Investment is expected to generate 2.67 times less return on investment than SIL Investments. But when comparing it to its historical volatility, Kalyani Investment is 1.43 times less risky than SIL Investments. It trades about 0.04 of its potential returns per unit of risk. SIL Investments Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  58,605  in SIL Investments Limited on September 3, 2024 and sell it today you would earn a total of  9,860  from holding SIL Investments Limited or generate 16.82% return on investment over 90 days.

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

Kalyani Investment  vs.  SIL Investments Limited

Kalyani Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kalyani Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SIL Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kalyani Investment and SIL Investments

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

The idea behind Kalyani Investment and SIL Investments 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.