Correlation Between SIL Investments and Bosch

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

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

Diversification Opportunities for SIL Investments and Bosch

-0.35

Correlation Coefficient

SIL Investments  Bosch

Very good diversification

The 3 months correlation between SIL and Bosch is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Bosch Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosch Limited and SIL Investments 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 SIL Investments Limited are associated (or correlated) with Bosch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosch Limited has no effect on the direction of SIL Investments i.e., SIL Investments and Bosch go up and down completely randomly.

Pair Corralation between SIL Investments and Bosch

Assuming the 90 days trading horizon SIL Investments Limited is expected to generate 3.1 times more return on investment than Bosch. However, SIL Investments is 3.1 times more volatile than Bosch Limited. It trades about 0.09 of its potential returns per unit of risk. Bosch Limited is currently generating about -0.07 per unit of risk. If you would invest  55,800  in SIL Investments Limited on October 7, 2024 and sell it today you would earn a total of  12,200  from holding SIL Investments Limited or generate 21.86% return on investment over 90 days.

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

SIL Investments Limited  vs.  Bosch Limited

SIL Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Bosch Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosch Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SIL Investments and Bosch

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

The idea behind SIL Investments Limited and Bosch 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.