Correlation Between SIL Investments and Agarwal Industrial

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

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

Diversification Opportunities for SIL Investments and Agarwal Industrial

0.5

Correlation Coefficient

SIL Investments  Agarwal Industrial

Very weak diversification

The 3 months correlation between SIL and Agarwal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and SIL Investments 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 SIL Investments Limited are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of SIL Investments i.e., SIL Investments and Agarwal Industrial go up and down completely randomly.

Pair Corralation between SIL Investments and Agarwal Industrial

Assuming the 90 days trading horizon SIL Investments Limited is expected to under-perform the Agarwal Industrial. But the stock apears to be less risky and, when comparing its historical volatility, SIL Investments Limited is 1.68 times less risky than Agarwal Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Agarwal Industrial is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  97,385  in Agarwal Industrial on May 6, 2025 and sell it today you would lose (1,425) from holding Agarwal Industrial or give up 1.46% of portfolio value over 90 days.

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

SIL Investments Limited  vs.  Agarwal Industrial

SIL Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIL Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, SIL Investments is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Agarwal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SIL Investments and Agarwal Industrial

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

The idea behind SIL Investments Limited and Agarwal Industrial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.