Correlation Between Suzlon Energy and SEPC

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

Diversification Opportunities for Suzlon Energy and SEPC

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Suzlon and SEPC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Suzlon Energy Limited and SEPC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEPC Limited and Suzlon Energy 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 Suzlon Energy Limited are associated (or correlated) with SEPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEPC Limited has no effect on the direction of Suzlon Energy i.e., Suzlon Energy and SEPC go up and down completely randomly.

Pair Corralation between Suzlon Energy and SEPC

Assuming the 90 days trading horizon Suzlon Energy Limited is expected to generate 0.85 times more return on investment than SEPC. However, Suzlon Energy Limited is 1.18 times less risky than SEPC. It trades about -0.2 of its potential returns per unit of risk. SEPC Limited is currently generating about -0.29 per unit of risk. If you would invest  6,736  in Suzlon Energy Limited on October 10, 2024 and sell it today you would lose (648.00) from holding Suzlon Energy Limited or give up 9.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Suzlon Energy Limited  vs.  SEPC Limited

 Performance 
       Timeline  
Suzlon Energy Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
SEPC Limited 

Risk-Adjusted Performance

0 of 100

 
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 uncertain 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.

Suzlon Energy and SEPC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Suzlon Energy and SEPC

The main advantage of trading using opposite Suzlon Energy and SEPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzlon Energy position performs unexpectedly, SEPC 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 SEPC will offset losses from the drop in SEPC's long position.
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The idea behind Suzlon Energy Limited and SEPC 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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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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