Correlation Between Syrma SGS and Coffee Day

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

By analyzing existing cross correlation between Syrma SGS Technology and Coffee Day Enterprises, you can compare the effects of market volatilities on Syrma SGS and Coffee Day 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 Syrma SGS with a short position of Coffee Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Syrma SGS and Coffee Day.

Diversification Opportunities for Syrma SGS and Coffee Day

-0.66

Correlation Coefficient

Syrma SGS  Coffee Day

Excellent diversification

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

Pair Corralation between Syrma SGS and Coffee Day

Assuming the 90 days trading horizon Syrma SGS Technology is expected to generate 1.34 times more return on investment than Coffee Day. However, Syrma SGS is 1.34 times more volatile than Coffee Day Enterprises. It trades about 0.13 of its potential returns per unit of risk. Coffee Day Enterprises is currently generating about -0.18 per unit of risk. If you would invest  46,815  in Syrma SGS Technology on September 13, 2024 and sell it today you would earn a total of  12,775  from holding Syrma SGS Technology or generate 27.29% return on investment over 90 days.

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

Syrma SGS Technology  vs.  Coffee Day Enterprises

Syrma SGS Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syrma SGS Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Syrma SGS displayed solid returns over the last few months and may actually be approaching a breakup point.

Coffee Day Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coffee Day Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's 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.

Pair Trading with Syrma SGS and Coffee Day

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

The idea behind Syrma SGS Technology and Coffee Day Enterprises 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..