Correlation Between Suzlon Energy and Uniinfo Telecom

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

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

Diversification Opportunities for Suzlon Energy and Uniinfo Telecom

0.53

Correlation Coefficient

Suzlon Energy  Uniinfo Telecom

Very weak diversification

The 3 months correlation between Suzlon and Uniinfo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Suzlon Energy Limited and Uniinfo Telecom Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniinfo Telecom Services and Suzlon Energy 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 Suzlon Energy Limited are associated (or correlated) with Uniinfo Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniinfo Telecom Services has no effect on the direction of Suzlon Energy i.e., Suzlon Energy and Uniinfo Telecom go up and down completely randomly.

Pair Corralation between Suzlon Energy and Uniinfo Telecom

Assuming the 90 days trading horizon Suzlon Energy Limited is expected to under-perform the Uniinfo Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Suzlon Energy Limited is 1.06 times less risky than Uniinfo Telecom. The stock trades about -0.1 of its potential returns per unit of risk. The Uniinfo Telecom Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,868  in Uniinfo Telecom Services on September 20, 2024 and sell it today you would earn a total of  296.00  from holding Uniinfo Telecom Services or generate 7.65% return on investment over 90 days.

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

Suzlon Energy Limited  vs.  Uniinfo Telecom Services

Suzlon Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Uniinfo Telecom Services

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with Suzlon Energy and Uniinfo Telecom

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

The idea behind Suzlon Energy Limited and Uniinfo Telecom Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.