Correlation Between SIS and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both SIS and MIC Electronics 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 SIS and MIC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIS LIMITED and MIC Electronics Limited, you can compare the effects of market volatilities on SIS and MIC Electronics 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 SIS with a short position of MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIS and MIC Electronics.
Diversification Opportunities for SIS and MIC Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIS and MIC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics and SIS 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 SIS LIMITED are associated (or correlated) with MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of SIS i.e., SIS and MIC Electronics go up and down completely randomly.
Pair Corralation between SIS and MIC Electronics
Assuming the 90 days trading horizon SIS LIMITED is expected to under-perform the MIC Electronics. But the stock apears to be less risky and, when comparing its historical volatility, SIS LIMITED is 1.22 times less risky than MIC Electronics. The stock trades about -0.15 of its potential returns per unit of risk. The MIC Electronics Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 8,481 in MIC Electronics Limited on November 3, 2024 and sell it today you would lose (347.00) from holding MIC Electronics Limited or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIS LIMITED vs. MIC Electronics Limited
Performance |
| Timeline |
| SIS LIMITED |
| MIC Electronics |
SIS and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIS and MIC Electronics
The main advantage of trading using opposite SIS and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIS position performs unexpectedly, MIC Electronics 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| SIS vs. Chambal Fertilizers Chemicals | SIS vs. Mangalore Chemicals Fertilizers | SIS vs. Hindcon Chemicals Limited | SIS vs. V Mart Retail Limited |
| MIC Electronics vs. Consolidated Construction Consortium | MIC Electronics vs. Biofil Chemicals Pharmaceuticals | MIC Electronics vs. Refex Industries Limited | MIC Electronics vs. Kingfa Science Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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