Correlation Between SIL Investments and Trent

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

Diversification Opportunities for SIL Investments and Trent

0.3

Correlation Coefficient

SIL Investments  Trent

Weak diversification

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

Pair Corralation between SIL Investments and Trent

Assuming the 90 days trading horizon SIL Investments Limited is expected to generate 1.04 times more return on investment than Trent. However, SIL Investments is 1.04 times more volatile than Trent Limited. It trades about 0.02 of its potential returns per unit of risk. Trent Limited is currently generating about -0.18 per unit of risk. If you would invest  60,720  in SIL Investments Limited on October 26, 2024 and sell it today you would earn a total of  385.00  from holding SIL Investments Limited or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

SIL Investments Limited  vs.  Trent Limited

SIL Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, SIL Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Trent Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trent Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SIL Investments and Trent

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

The idea behind SIL Investments Limited and Trent 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..