Correlation Between SIS and Arvind

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

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

Diversification Opportunities for SIS and Arvind

-0.42

Correlation Coefficient

SIS  Arvind

Very good diversification

The 3 months correlation between SIS and Arvind is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and Arvind Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arvind Limited and SIS 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 SIS LIMITED are associated (or correlated) with Arvind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arvind Limited has no effect on the direction of SIS i.e., SIS and Arvind go up and down completely randomly.

Pair Corralation between SIS and Arvind

If you would invest  38,548  in Arvind Limited on October 8, 2024 and sell it today you would earn a total of  2,377  from holding Arvind Limited or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

SIS LIMITED  vs.  Arvind Limited

SIS LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Arvind Limited

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with SIS and Arvind

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

The idea behind SIS LIMITED and Arvind 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.