Correlation Between NIFTY SUMER and Trent

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NIFTY SUMER and Trent 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 NIFTY SUMER and Trent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIFTY SUMER DURABLES and Trent Limited, you can compare the effects of market volatilities on NIFTY SUMER and Trent 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 NIFTY SUMER with a short position of Trent. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIFTY SUMER and Trent.

Diversification Opportunities for NIFTY SUMER and Trent

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between NIFTY and Trent is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NIFTY SUMER DURABLES and Trent Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trent Limited and NIFTY SUMER 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 NIFTY SUMER DURABLES are associated (or correlated) with Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trent Limited has no effect on the direction of NIFTY SUMER i.e., NIFTY SUMER and Trent go up and down completely randomly.
    Optimize

Pair Corralation between NIFTY SUMER and Trent

Assuming the 90 days trading horizon NIFTY SUMER DURABLES is expected to generate 0.49 times more return on investment than Trent. However, NIFTY SUMER DURABLES is 2.03 times less risky than Trent. It trades about 0.0 of its potential returns per unit of risk. Trent Limited is currently generating about -0.03 per unit of risk. If you would invest  4,269,195  in NIFTY SUMER DURABLES on September 12, 2024 and sell it today you would lose (19,005) from holding NIFTY SUMER DURABLES or give up 0.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

NIFTY SUMER DURABLES  vs.  Trent Limited

 Performance 
       Timeline  

NIFTY SUMER and Trent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NIFTY SUMER and Trent

The main advantage of trading using opposite NIFTY SUMER and Trent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIFTY SUMER position performs unexpectedly, Trent 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 Trent will offset losses from the drop in Trent's long position.
The idea behind NIFTY SUMER DURABLES and Trent Limited 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing