Correlation Between SEPC and Exide Industries

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

Diversification Opportunities for SEPC and Exide Industries

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SEPC and Exide is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SEPC Limited and Exide Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exide Industries and SEPC 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 SEPC Limited are associated (or correlated) with Exide Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exide Industries has no effect on the direction of SEPC i.e., SEPC and Exide Industries go up and down completely randomly.

Pair Corralation between SEPC and Exide Industries

Assuming the 90 days trading horizon SEPC Limited is expected to under-perform the Exide Industries. In addition to that, SEPC is 1.76 times more volatile than Exide Industries Limited. It trades about -0.19 of its total potential returns per unit of risk. Exide Industries Limited is currently generating about -0.16 per unit of volatility. If you would invest  41,675  in Exide Industries Limited on October 23, 2024 and sell it today you would lose (2,520) from holding Exide Industries Limited or give up 6.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SEPC Limited  vs.  Exide Industries Limited

 Performance 
       Timeline  
SEPC Limited 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SEPC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Exide Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Exide Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SEPC and Exide Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SEPC and Exide Industries

The main advantage of trading using opposite SEPC and Exide Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEPC position performs unexpectedly, Exide Industries 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 Exide Industries will offset losses from the drop in Exide Industries' long position.
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The idea behind SEPC Limited and Exide Industries 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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