Correlation Between Silgo Retail and Touchwood Entertainment

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

Diversification Opportunities for Silgo Retail and Touchwood Entertainment

0.6

Correlation Coefficient

Silgo Retail  Touchwood Entertainment

Poor diversification

The 3 months correlation between Silgo and Touchwood is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Silgo Retail Limited and Touchwood Entertainment Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchwood Entertainment 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 Touchwood Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchwood Entertainment has no effect on the direction of Silgo Retail i.e., Silgo Retail and Touchwood Entertainment go up and down completely randomly.

Pair Corralation between Silgo Retail and Touchwood Entertainment

Assuming the 90 days trading horizon Silgo Retail is expected to generate 1.49 times less return on investment than Touchwood Entertainment. But when comparing it to its historical volatility, Silgo Retail Limited is 1.27 times less risky than Touchwood Entertainment. It trades about 0.13 of its potential returns per unit of risk. Touchwood Entertainment Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13,517  in Touchwood Entertainment Limited on September 19, 2024 and sell it today you would earn a total of  1,591  from holding Touchwood Entertainment Limited or generate 11.77% return on investment over 90 days.

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

Silgo Retail Limited  vs.  Touchwood Entertainment 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 very healthy essential indicators, Silgo Retail is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Touchwood Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Silgo Retail Limited and Touchwood Entertainment 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.