Correlation Between SEPC and Industrial Investment

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

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

Diversification Opportunities for SEPC and Industrial Investment

-0.54

Correlation Coefficient

SEPC  Industrial Investment

Excellent diversification

The 3 months correlation between SEPC and Industrial is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SEPC Limited and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and SEPC 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 SEPC Limited are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of SEPC i.e., SEPC and Industrial Investment go up and down completely randomly.

Pair Corralation between SEPC and Industrial Investment

Assuming the 90 days trading horizon SEPC is expected to generate 1.97 times less return on investment than Industrial Investment. In addition to that, SEPC is 1.13 times more volatile than Industrial Investment Trust. It trades about 0.04 of its total potential returns per unit of risk. Industrial Investment Trust is currently generating about 0.08 per unit of volatility. If you would invest  10,545  in Industrial Investment Trust on October 11, 2024 and sell it today you would earn a total of  19,120  from holding Industrial Investment Trust or generate 181.32% return on investment over 90 days.

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

SEPC Limited  vs.  Industrial Investment Trust

SEPC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEPC 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Industrial Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Industrial Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SEPC and Industrial Investment

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

The idea behind SEPC Limited and Industrial Investment Trust 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.