Correlation Between Silly Monks and Welspun Investments

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

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

Diversification Opportunities for Silly Monks and Welspun Investments

0.15

Correlation Coefficient

Silly Monks  Welspun Investments

Average diversification

The 3 months correlation between Silly and Welspun is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and Welspun Investments and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welspun Investments and and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with Welspun Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welspun Investments and has no effect on the direction of Silly Monks i.e., Silly Monks and Welspun Investments go up and down completely randomly.

Pair Corralation between Silly Monks and Welspun Investments

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 0.89 times more return on investment than Welspun Investments. However, Silly Monks Entertainment is 1.12 times less risky than Welspun Investments. It trades about 0.02 of its potential returns per unit of risk. Welspun Investments and is currently generating about -0.09 per unit of risk. If you would invest  2,308  in Silly Monks Entertainment on October 20, 2024 and sell it today you would earn a total of  2.00  from holding Silly Monks Entertainment or generate 0.09% return on investment over 90 days.

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

Silly Monks Entertainment  vs.  Welspun Investments and

Silly Monks Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Silly Monks is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Welspun Investments and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welspun Investments and 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.

Pair Trading with Silly Monks and Welspun Investments

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

The idea behind Silly Monks Entertainment and Welspun Investments and 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.