Correlation Between SIL Investments and Thomas Scott

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

Diversification Opportunities for SIL Investments and Thomas Scott

-0.32

Correlation Coefficient

SIL Investments  Thomas Scott

Very good diversification

The 3 months correlation between SIL and Thomas is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Thomas Scott Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomas Scott 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 Thomas Scott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomas Scott Limited has no effect on the direction of SIL Investments i.e., SIL Investments and Thomas Scott go up and down completely randomly.

Pair Corralation between SIL Investments and Thomas Scott

Assuming the 90 days trading horizon SIL Investments is expected to generate 2.82 times less return on investment than Thomas Scott. In addition to that, SIL Investments is 1.02 times more volatile than Thomas Scott Limited. It trades about 0.06 of its total potential returns per unit of risk. Thomas Scott Limited is currently generating about 0.18 per unit of volatility. If you would invest  4,550  in Thomas Scott Limited on October 22, 2024 and sell it today you would earn a total of  36,610  from holding Thomas Scott Limited or generate 804.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

SIL Investments Limited  vs.  Thomas Scott Limited

SIL Investments

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thomas Scott Limited

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thomas Scott Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Thomas Scott exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIL Investments and Thomas Scott

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

The idea behind SIL Investments Limited and Thomas Scott 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..