Correlation Between Silgo Retail and RITES

Can any of the company-specific risk be diversified away by investing in both Silgo Retail and RITES 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 RITES 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 RITES Limited, you can compare the effects of market volatilities on Silgo Retail and RITES 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 RITES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silgo Retail and RITES.

Diversification Opportunities for Silgo Retail and RITES

-0.3

Correlation Coefficient

Silgo Retail  RITES

Very good diversification

The 3 months correlation between Silgo and RITES is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Silgo Retail Limited and RITES Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RITES Limited 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 RITES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RITES Limited has no effect on the direction of Silgo Retail i.e., Silgo Retail and RITES go up and down completely randomly.

Pair Corralation between Silgo Retail and RITES

Assuming the 90 days trading horizon Silgo Retail Limited is expected to generate 1.59 times more return on investment than RITES. However, Silgo Retail is 1.59 times more volatile than RITES Limited. It trades about 0.08 of its potential returns per unit of risk. RITES Limited is currently generating about -0.06 per unit of risk. If you would invest  3,791  in Silgo Retail Limited on December 23, 2024 and sell it today you would earn a total of  731.00  from holding Silgo Retail Limited or generate 19.28% return on investment over 90 days.

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

Silgo Retail Limited  vs.  RITES Limited

Silgo Retail Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silgo Retail Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Silgo Retail displayed solid returns over the last few months and may actually be approaching a breakup point.

RITES Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days RITES Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Silgo Retail and RITES

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

The idea behind Silgo Retail Limited and RITES 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.