Correlation Between Power FinanceLimited and Silgo Retail
Can any of the company-specific risk be diversified away by investing in both Power FinanceLimited and Silgo Retail 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 Power FinanceLimited and Silgo Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Finance and Silgo Retail Limited, you can compare the effects of market volatilities on Power FinanceLimited and Silgo Retail 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 Power FinanceLimited with a short position of Silgo Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power FinanceLimited and Silgo Retail.
Diversification Opportunities for Power FinanceLimited and Silgo Retail
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Power and Silgo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited and Power FinanceLimited 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 Power Finance are associated (or correlated) with Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Power FinanceLimited i.e., Power FinanceLimited and Silgo Retail go up and down completely randomly.
Pair Corralation between Power FinanceLimited and Silgo Retail
Assuming the 90 days trading horizon Power Finance is expected to generate 1.19 times more return on investment than Silgo Retail. However, Power FinanceLimited is 1.19 times more volatile than Silgo Retail Limited. It trades about 0.15 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about -0.27 per unit of risk. If you would invest 44,735 in Power Finance on August 29, 2024 and sell it today you would earn a total of 3,705 from holding Power Finance or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Power Finance vs. Silgo Retail Limited
Performance |
| Timeline |
| Power FinanceLimited |
| Silgo Retail Limited |
Power FinanceLimited and Silgo Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power FinanceLimited and Silgo Retail
The main advantage of trading using opposite Power FinanceLimited and Silgo Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power FinanceLimited position performs unexpectedly, Silgo Retail 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 Silgo Retail will offset losses from the drop in Silgo Retail's long position.The idea behind Power Finance and Silgo Retail 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.
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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 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.
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