Correlation Between SIS and Indo Rama

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

By analyzing existing cross correlation between SIS LIMITED and Indo Rama Synthetics, you can compare the effects of market volatilities on SIS and Indo Rama 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 Indo Rama. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIS and Indo Rama.

Diversification Opportunities for SIS and Indo Rama

-0.3

Correlation Coefficient

SIS  Indo Rama

Very good diversification

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

Pair Corralation between SIS and Indo Rama

Assuming the 90 days trading horizon SIS LIMITED is expected to under-perform the Indo Rama. But the stock apears to be less risky and, when comparing its historical volatility, SIS LIMITED is 1.57 times less risky than Indo Rama. The stock trades about 0.0 of its potential returns per unit of risk. The Indo Rama Synthetics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,255  in Indo Rama Synthetics on October 23, 2024 and sell it today you would lose (879.00) from holding Indo Rama Synthetics or give up 16.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

SIS LIMITED  vs.  Indo Rama Synthetics

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Indo Rama Synthetics

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Rama Synthetics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Indo Rama may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SIS and Indo Rama

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

The idea behind SIS LIMITED and Indo Rama Synthetics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.