Correlation Between Silver Touch and Arrow Greentech

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

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

Diversification Opportunities for Silver Touch and Arrow Greentech

0.02

Correlation Coefficient

Silver Touch  Arrow Greentech

Significant diversification

The 3 months correlation between Silver and Arrow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Silver Touch Technologies and Arrow Greentech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Greentech and Silver Touch 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 Silver Touch Technologies are associated (or correlated) with Arrow Greentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Greentech has no effect on the direction of Silver Touch i.e., Silver Touch and Arrow Greentech go up and down completely randomly.

Pair Corralation between Silver Touch and Arrow Greentech

Assuming the 90 days trading horizon Silver Touch is expected to generate 1.66 times less return on investment than Arrow Greentech. But when comparing it to its historical volatility, Silver Touch Technologies is 1.8 times less risky than Arrow Greentech. It trades about 0.09 of its potential returns per unit of risk. Arrow Greentech Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  32,862  in Arrow Greentech Limited on September 30, 2024 and sell it today you would earn a total of  47,263  from holding Arrow Greentech Limited or generate 143.82% return on investment over 90 days.

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

Silver Touch Technologies  vs.  Arrow Greentech Limited

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 comparatively stable basic indicators, Silver Touch is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Arrow Greentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Silver Touch and Arrow Greentech

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

The idea behind Silver Touch Technologies and Arrow Greentech 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.