Correlation Between Power Finance and SIS
Can any of the company-specific risk be diversified away by investing in both Power Finance and SIS 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 Finance and SIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Finance and SIS LIMITED, you can compare the effects of market volatilities on Power Finance and SIS 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 Finance with a short position of SIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and SIS.
Diversification Opportunities for Power Finance and SIS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and SIS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and SIS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIS LIMITED and Power Finance 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 SIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIS LIMITED has no effect on the direction of Power Finance i.e., Power Finance and SIS go up and down completely randomly.
Pair Corralation between Power Finance and SIS
Assuming the 90 days trading horizon Power Finance is expected to generate 1.8 times more return on investment than SIS. However, Power Finance is 1.8 times more volatile than SIS LIMITED. It trades about 0.15 of its potential returns per unit of risk. SIS LIMITED is currently generating about 0.0 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 Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Power Finance vs. SIS LIMITED
Performance |
| Timeline |
| Power Finance |
| SIS LIMITED |
Power Finance and SIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Finance and SIS
The main advantage of trading using opposite Power Finance and SIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Finance position performs unexpectedly, SIS 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 SIS will offset losses from the drop in SIS's long position.| Power Finance vs. Shemaroo Entertainment Limited | Power Finance vs. Hindustan Media Ventures | Power Finance vs. JGCHEMICALS LIMITED | Power Finance vs. Thirumalai Chemicals Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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