Correlation Between NIFTY SUMER and Silgo Retail

Can any of the company-specific risk be diversified away by investing in both NIFTY SUMER and Silgo Retail 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 NIFTY SUMER and Silgo Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NIFTY SUMER DURABLES and Silgo Retail Limited, you can compare the effects of market volatilities on NIFTY SUMER and Silgo Retail 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 NIFTY SUMER with a short position of Silgo Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIFTY SUMER and Silgo Retail.

Diversification Opportunities for NIFTY SUMER and Silgo Retail

0.37

Correlation Coefficient

NIFTY SUMER  Silgo Retail

Weak diversification

The 3 months correlation between NIFTY and Silgo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NIFTY SUMER DURABLES and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited and NIFTY SUMER 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 NIFTY SUMER DURABLES are associated (or correlated) with Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of NIFTY SUMER i.e., NIFTY SUMER and Silgo Retail go up and down completely randomly.

Pair Corralation between NIFTY SUMER and Silgo Retail

Assuming the 90 days trading horizon NIFTY SUMER DURABLES is expected to generate 0.26 times more return on investment than Silgo Retail. However, NIFTY SUMER DURABLES is 3.81 times less risky than Silgo Retail. It trades about 0.68 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about 0.14 per unit of risk. If you would invest  3,877,930  in NIFTY SUMER DURABLES on September 18, 2024 and sell it today you would earn a total of  434,575  from holding NIFTY SUMER DURABLES or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

NIFTY SUMER DURABLES  vs.  Silgo Retail Limited

Pair Trading with NIFTY SUMER and Silgo Retail

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

The idea behind NIFTY SUMER DURABLES and Silgo 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.