Correlation Between Meghmani Organics and Silver Touch

Can any of the company-specific risk be diversified away by investing in both Meghmani Organics and Silver Touch 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 Meghmani Organics and Silver Touch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meghmani Organics Limited and Silver Touch Technologies, you can compare the effects of market volatilities on Meghmani Organics and Silver Touch 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 Meghmani Organics with a short position of Silver Touch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meghmani Organics and Silver Touch.

Diversification Opportunities for Meghmani Organics and Silver Touch

0.66

Correlation Coefficient

Meghmani Organics  Silver Touch

Poor diversification

The 3 months correlation between Meghmani and Silver is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meghmani Organics Limited and Silver Touch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Touch Technologies and Meghmani Organics 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 Meghmani Organics Limited are associated (or correlated) with Silver Touch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Touch Technologies has no effect on the direction of Meghmani Organics i.e., Meghmani Organics and Silver Touch go up and down completely randomly.

Pair Corralation between Meghmani Organics and Silver Touch

Assuming the 90 days trading horizon Meghmani Organics Limited is expected to under-perform the Silver Touch. In addition to that, Meghmani Organics is 1.64 times more volatile than Silver Touch Technologies. It trades about -0.29 of its total potential returns per unit of risk. Silver Touch Technologies is currently generating about -0.16 per unit of volatility. If you would invest  70,380  in Silver Touch Technologies on September 23, 2024 and sell it today you would lose (2,550) from holding Silver Touch Technologies or give up 3.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Meghmani Organics Limited  vs.  Silver Touch Technologies

Meghmani Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meghmani Organics 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Silver Touch Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Touch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Meghmani Organics and Silver Touch

The main advantage of trading using opposite Meghmani Organics and Silver Touch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meghmani Organics position performs unexpectedly, Silver Touch 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 Silver Touch will offset losses from the drop in Silver Touch's long position.

The idea behind Meghmani Organics Limited and Silver Touch Technologies 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.