Correlation Between Hindustan Construction and Silgo Retail

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

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

Diversification Opportunities for Hindustan Construction and Silgo Retail

0.46

Correlation Coefficient

Hindustan Construction  Silgo Retail

Very weak diversification

The 3 months correlation between Hindustan and Silgo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Construction and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited and Hindustan Construction 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 Hindustan Construction are associated (or correlated) with Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Hindustan Construction i.e., Hindustan Construction and Silgo Retail go up and down completely randomly.

Pair Corralation between Hindustan Construction and Silgo Retail

Assuming the 90 days trading horizon Hindustan Construction is expected to generate 3.43 times less return on investment than Silgo Retail. In addition to that, Hindustan Construction is 1.39 times more volatile than Silgo Retail Limited. It trades about 0.03 of its total potential returns per unit of risk. Silgo Retail Limited is currently generating about 0.15 per unit of volatility. If you would invest  4,644  in Silgo Retail Limited on April 24, 2025 and sell it today you would earn a total of  928.00  from holding Silgo Retail Limited or generate 19.98% return on investment over 90 days.

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

Hindustan Construction  vs.  Silgo Retail Limited

Hindustan Construction

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hindustan Construction are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hindustan Construction is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Silgo Retail Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silgo Retail Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Silgo Retail displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hindustan Construction and Silgo Retail

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

The idea behind Hindustan Construction and Silgo Retail 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 Stocks Directory module to find actively traded stocks across global markets.