Correlation Between Silgo Retail and KIOCL

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

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

Diversification Opportunities for Silgo Retail and KIOCL

-0.13

Correlation Coefficient

Silgo Retail  KIOCL

Good diversification

The 3 months correlation between Silgo and KIOCL is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Silgo Retail Limited and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Silgo Retail 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 Silgo Retail Limited are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Silgo Retail i.e., Silgo Retail and KIOCL go up and down completely randomly.

Pair Corralation between Silgo Retail and KIOCL

Assuming the 90 days trading horizon Silgo Retail is expected to generate 1.1 times less return on investment than KIOCL. In addition to that, Silgo Retail is 1.07 times more volatile than KIOCL Limited. It trades about 0.05 of its total potential returns per unit of risk. KIOCL Limited is currently generating about 0.05 per unit of volatility. If you would invest  19,260  in KIOCL Limited on September 16, 2024 and sell it today you would earn a total of  18,055  from holding KIOCL Limited or generate 93.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Silgo Retail Limited  vs.  KIOCL Limited

Silgo Retail Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silgo Retail Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Silgo Retail displayed solid returns over the last few months and may actually be approaching a breakup point.

KIOCL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Silgo Retail and KIOCL

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

The idea behind Silgo Retail Limited and KIOCL 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 Transaction History module to view history of all your transactions and understand their impact on performance.