Correlation Between Syrma SGS and State Trading

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

By analyzing existing cross correlation between Syrma SGS Technology and The State Trading, you can compare the effects of market volatilities on Syrma SGS and State Trading 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 Syrma SGS with a short position of State Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Syrma SGS and State Trading.

Diversification Opportunities for Syrma SGS and State Trading

0.15

Correlation Coefficient

Syrma SGS  State Trading

Average diversification

The 3 months correlation between Syrma and State is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Syrma SGS Technology and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Trading and Syrma SGS 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 Syrma SGS Technology are associated (or correlated) with State Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Trading has no effect on the direction of Syrma SGS i.e., Syrma SGS and State Trading go up and down completely randomly.

Pair Corralation between Syrma SGS and State Trading

Assuming the 90 days trading horizon Syrma SGS Technology is expected to generate 0.92 times more return on investment than State Trading. However, Syrma SGS Technology is 1.08 times less risky than State Trading. It trades about 0.11 of its potential returns per unit of risk. The State Trading is currently generating about -0.08 per unit of risk. If you would invest  57,865  in Syrma SGS Technology on October 11, 2024 and sell it today you would earn a total of  3,150  from holding Syrma SGS Technology or generate 5.44% return on investment over 90 days.

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

Syrma SGS Technology  vs.  The State Trading

Syrma SGS Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

State Trading

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, State Trading is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Syrma SGS and State Trading

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

The idea behind Syrma SGS Technology and The State Trading 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.