Correlation Between SIS and Motilal Oswal

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

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

Diversification Opportunities for SIS and Motilal Oswal

-0.63

Correlation Coefficient

SIS  Motilal Oswal

Excellent diversification

The 3 months correlation between SIS and Motilal is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial 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 Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of SIS i.e., SIS and Motilal Oswal go up and down completely randomly.

Pair Corralation between SIS and Motilal Oswal

Assuming the 90 days trading horizon SIS LIMITED is expected to under-perform the Motilal Oswal. But the stock apears to be less risky and, when comparing its historical volatility, SIS LIMITED is 1.9 times less risky than Motilal Oswal. The stock trades about -0.17 of its potential returns per unit of risk. The Motilal Oswal Financial is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  94,390  in Motilal Oswal Financial on October 1, 2024 and sell it today you would lose (3,350) from holding Motilal Oswal Financial or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

SIS LIMITED  vs.  Motilal Oswal Financial

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.

Motilal Oswal Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIS and Motilal Oswal

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

The idea behind SIS LIMITED and Motilal Oswal Financial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..