Correlation Between Summit Securities and BAG Films

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

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

Diversification Opportunities for Summit Securities and BAG Films

-0.39

Correlation Coefficient

Summit Securities  BAG Films

Very good diversification

The 3 months correlation between Summit and BAG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Summit Securities Limited and BAG Films and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAG Films and Summit Securities 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 Summit Securities Limited are associated (or correlated) with BAG Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAG Films has no effect on the direction of Summit Securities i.e., Summit Securities and BAG Films go up and down completely randomly.

Pair Corralation between Summit Securities and BAG Films

Assuming the 90 days trading horizon Summit Securities Limited is expected to generate 0.81 times more return on investment than BAG Films. However, Summit Securities Limited is 1.24 times less risky than BAG Films. It trades about 0.1 of its potential returns per unit of risk. BAG Films and is currently generating about 0.08 per unit of risk. If you would invest  142,390  in Summit Securities Limited on September 23, 2024 and sell it today you would earn a total of  172,825  from holding Summit Securities Limited or generate 121.37% return on investment over 90 days.

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

Summit Securities Limited  vs.  BAG Films and

Summit Securities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Securities Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Summit Securities unveiled solid returns over the last few months and may actually be approaching a breakup point.

BAG Films

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BAG Films and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, BAG Films displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Securities and BAG Films

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

The idea behind Summit Securities Limited and BAG Films 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.