Correlation Between Oil Natural and Syrma SGS

Can any of the company-specific risk be diversified away by investing in both Oil Natural and Syrma SGS 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 Oil Natural and Syrma SGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oil Natural Gas and Syrma SGS Technology, you can compare the effects of market volatilities on Oil Natural and Syrma SGS 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 Oil Natural with a short position of Syrma SGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and Syrma SGS.

Diversification Opportunities for Oil Natural and Syrma SGS

-0.5

Correlation Coefficient

Oil Natural  Syrma SGS

Very good diversification

The 3 months correlation between Oil and Syrma is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Syrma SGS Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrma SGS Technology and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Syrma SGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrma SGS Technology has no effect on the direction of Oil Natural i.e., Oil Natural and Syrma SGS go up and down completely randomly.

Pair Corralation between Oil Natural and Syrma SGS

Assuming the 90 days trading horizon Oil Natural Gas is expected to generate 0.72 times more return on investment than Syrma SGS. However, Oil Natural Gas is 1.39 times less risky than Syrma SGS. It trades about 0.23 of its potential returns per unit of risk. Syrma SGS Technology is currently generating about -0.29 per unit of risk. If you would invest  24,085  in Oil Natural Gas on October 24, 2024 and sell it today you would earn a total of  2,495  from holding Oil Natural Gas or generate 10.36% return on investment over 90 days.

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

Oil Natural Gas  vs.  Syrma SGS Technology

Oil Natural Gas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Natural Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Oil Natural is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Syrma SGS Technology

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oil Natural and Syrma SGS

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

The idea behind Oil Natural Gas and Syrma SGS Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.