Correlation Between Som Distilleries and ITI

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

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

Diversification Opportunities for Som Distilleries and ITI

-0.33

Correlation Coefficient

Som Distilleries  ITI

Very good diversification

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

Pair Corralation between Som Distilleries and ITI

Assuming the 90 days trading horizon Som Distilleries Breweries is expected to generate 0.54 times more return on investment than ITI. However, Som Distilleries Breweries is 1.87 times less risky than ITI. It trades about 0.1 of its potential returns per unit of risk. ITI Limited is currently generating about -0.06 per unit of risk. If you would invest  10,970  in Som Distilleries Breweries on December 20, 2024 and sell it today you would earn a total of  1,837  from holding Som Distilleries Breweries or generate 16.75% return on investment over 90 days.

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

Som Distilleries Breweries  vs.  ITI Limited

Som Distilleries Bre

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Som Distilleries Breweries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Som Distilleries unveiled solid returns over the last few months and may actually be approaching a breakup point.

ITI Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with Som Distilleries and ITI

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

The idea behind Som Distilleries Breweries and ITI 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.