Correlation Between ShippingOf India and Wipro

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

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

Diversification Opportunities for ShippingOf India and Wipro

-0.33

Correlation Coefficient

ShippingOf India  Wipro

Very good diversification

The 3 months correlation between ShippingOf and Wipro is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shipping and Wipro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited and ShippingOf India 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 Shipping are associated (or correlated) with Wipro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited has no effect on the direction of ShippingOf India i.e., ShippingOf India and Wipro go up and down completely randomly.

Pair Corralation between ShippingOf India and Wipro

Assuming the 90 days trading horizon Shipping is expected to under-perform the Wipro. In addition to that, ShippingOf India is 1.45 times more volatile than Wipro Limited. It trades about -0.27 of its total potential returns per unit of risk. Wipro Limited is currently generating about -0.02 per unit of volatility. If you would invest  28,680  in Wipro Limited on December 1, 2024 and sell it today you would lose (915.00) from holding Wipro Limited or give up 3.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Shipping  vs.  Wipro Limited

ShippingOf India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Wipro Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ShippingOf India and Wipro

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

The idea behind Shipping and Wipro 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..