Correlation Between India Glycols and Shree Rama

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

By analyzing existing cross correlation between India Glycols Limited and Shree Rama Multi Tech, you can compare the effects of market volatilities on India Glycols and Shree Rama 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 India Glycols with a short position of Shree Rama. Check out your portfolio center. Please also check ongoing floating volatility patterns of India Glycols and Shree Rama.

Diversification Opportunities for India Glycols and Shree Rama

0.68

Correlation Coefficient

India Glycols  Shree Rama

Poor diversification

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

Pair Corralation between India Glycols and Shree Rama

Assuming the 90 days trading horizon India Glycols Limited is expected to generate 1.14 times more return on investment than Shree Rama. However, India Glycols is 1.14 times more volatile than Shree Rama Multi Tech. It trades about 0.15 of its potential returns per unit of risk. Shree Rama Multi Tech is currently generating about 0.14 per unit of risk. If you would invest  138,460  in India Glycols Limited on May 7, 2025 and sell it today you would earn a total of  36,250  from holding India Glycols Limited or generate 26.18% return on investment over 90 days.

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

India Glycols Limited  vs.  Shree Rama Multi Tech

India Glycols Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in India Glycols Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, India Glycols disclosed solid returns over the last few months and may actually be approaching a breakup point.

Shree Rama Multi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shree Rama Multi Tech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Shree Rama sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with India Glycols and Shree Rama

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

The idea behind India Glycols Limited and Shree Rama Multi Tech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.