Correlation Between SIL Investments and Gangotri Textiles

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

Diversification Opportunities for SIL Investments and Gangotri Textiles

0.87

Correlation Coefficient

SIL Investments  Gangotri Textiles

Very poor diversification

The 3 months correlation between SIL and Gangotri is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Gangotri Textiles Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gangotri Textiles 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 Gangotri Textiles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gangotri Textiles has no effect on the direction of SIL Investments i.e., SIL Investments and Gangotri Textiles go up and down completely randomly.

Pair Corralation between SIL Investments and Gangotri Textiles

Assuming the 90 days trading horizon SIL Investments Limited is expected to under-perform the Gangotri Textiles. In addition to that, SIL Investments is 1.46 times more volatile than Gangotri Textiles Limited. It trades about -0.26 of its total potential returns per unit of risk. Gangotri Textiles Limited is currently generating about -0.19 per unit of volatility. If you would invest  119.00  in Gangotri Textiles Limited on December 2, 2024 and sell it today you would lose (22.00) from holding Gangotri Textiles Limited or give up 18.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

SIL Investments Limited  vs.  Gangotri Textiles Limited

SIL Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIL Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gangotri Textiles

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gangotri Textiles Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SIL Investments and Gangotri Textiles

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

The idea behind SIL Investments Limited and Gangotri Textiles 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.