Correlation Between SIL Investments and Repco Home

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

Diversification Opportunities for SIL Investments and Repco Home

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SIL and Repco is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Repco Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repco Home Finance and SIL Investments 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 SIL Investments Limited are associated (or correlated) with Repco Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repco Home Finance has no effect on the direction of SIL Investments i.e., SIL Investments and Repco Home go up and down completely randomly.

Pair Corralation between SIL Investments and Repco Home

Assuming the 90 days trading horizon SIL Investments Limited is expected to generate 1.25 times more return on investment than Repco Home. However, SIL Investments is 1.25 times more volatile than Repco Home Finance. It trades about 0.09 of its potential returns per unit of risk. Repco Home Finance is currently generating about 0.04 per unit of risk. If you would invest  39,363  in SIL Investments Limited on September 3, 2024 and sell it today you would earn a total of  30,967  from holding SIL Investments Limited or generate 78.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SIL Investments Limited  vs.  Repco Home Finance

 Performance 
       Timeline  
SIL Investments 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.
Repco Home Finance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Repco Home Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Repco Home is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SIL Investments and Repco Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIL Investments and Repco Home

The main advantage of trading using opposite SIL Investments and Repco Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIL Investments position performs unexpectedly, Repco Home 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 Repco Home will offset losses from the drop in Repco Home's long position.
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The idea behind SIL Investments Limited and Repco Home Finance 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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