Correlation Between SIS and Karur Vysya

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

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

Diversification Opportunities for SIS and Karur Vysya

-0.34

Correlation Coefficient

SIS  Karur Vysya

Very good diversification

The 3 months correlation between SIS and Karur is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank 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 Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of SIS i.e., SIS and Karur Vysya go up and down completely randomly.

Pair Corralation between SIS and Karur Vysya

Assuming the 90 days trading horizon SIS LIMITED is expected to generate 0.55 times more return on investment than Karur Vysya. However, SIS LIMITED is 1.81 times less risky than Karur Vysya. It trades about -0.21 of its potential returns per unit of risk. Karur Vysya Bank is currently generating about -0.24 per unit of risk. If you would invest  37,770  in SIS LIMITED on October 4, 2024 and sell it today you would lose (1,680) from holding SIS LIMITED or give up 4.45% of portfolio value over 90 days.

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

SIS LIMITED  vs.  Karur Vysya Bank

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 uncertain 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.

Karur Vysya Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Karur Vysya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SIS and Karur Vysya

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

The idea behind SIS LIMITED and Karur Vysya Bank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.