Correlation Between Silgo Retail and Reliance Infrastructure

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

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

Diversification Opportunities for Silgo Retail and Reliance Infrastructure

0.02

Correlation Coefficient

Silgo Retail  Reliance Infrastructure

Significant diversification

The 3 months correlation between Silgo and Reliance is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Silgo Retail Limited and Reliance Infrastructure Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Infrastructure and Silgo Retail 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 Silgo Retail Limited are associated (or correlated) with Reliance Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Infrastructure has no effect on the direction of Silgo Retail i.e., Silgo Retail and Reliance Infrastructure go up and down completely randomly.

Pair Corralation between Silgo Retail and Reliance Infrastructure

Assuming the 90 days trading horizon Silgo Retail Limited is expected to under-perform the Reliance Infrastructure. But the stock apears to be less risky and, when comparing its historical volatility, Silgo Retail Limited is 1.01 times less risky than Reliance Infrastructure. The stock trades about -0.16 of its potential returns per unit of risk. The Reliance Infrastructure Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  27,445  in Reliance Infrastructure Limited on October 26, 2024 and sell it today you would lose (5.00) from holding Reliance Infrastructure Limited or give up 0.02% of portfolio value over 90 days.

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

Silgo Retail Limited  vs.  Reliance Infrastructure Limite

Silgo Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silgo Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Reliance Infrastructure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Infrastructure Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Reliance Infrastructure is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Silgo Retail and Reliance Infrastructure

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

The idea behind Silgo Retail Limited and Reliance Infrastructure 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.