Correlation Between SIL Investments and Mask Investments

Can any of the company-specific risk be diversified away by investing in both SIL Investments and Mask Investments 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 Mask Investments 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 Mask Investments Limited, you can compare the effects of market volatilities on SIL Investments and Mask Investments 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 Mask Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIL Investments and Mask Investments.

Diversification Opportunities for SIL Investments and Mask Investments

0.26

Correlation Coefficient

SIL Investments  Mask Investments

Modest diversification

The 3 months correlation between SIL and Mask is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Mask Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mask Investments 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 Mask Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mask Investments has no effect on the direction of SIL Investments i.e., SIL Investments and Mask Investments go up and down completely randomly.

Pair Corralation between SIL Investments and Mask Investments

Assuming the 90 days trading horizon SIL Investments Limited is expected to under-perform the Mask Investments. But the stock apears to be less risky and, when comparing its historical volatility, SIL Investments Limited is 2.12 times less risky than Mask Investments. The stock trades about -0.12 of its potential returns per unit of risk. The Mask Investments Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  16,482  in Mask Investments Limited on April 20, 2025 and sell it today you would lose (192.00) from holding Mask Investments Limited or give up 1.16% of portfolio value over 90 days.

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

SIL Investments Limited  vs.  Mask Investments Limited

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 latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mask Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mask Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Mask Investments is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SIL Investments and Mask Investments

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

The idea behind SIL Investments Limited and Mask Investments 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.