Correlation Between NIFTY SUMER and VIKRAM SOLAR

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Can any of the company-specific risk be diversified away by investing in both NIFTY SUMER and VIKRAM SOLAR 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 NIFTY SUMER and VIKRAM SOLAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIFTY SUMER DURABLES and VIKRAM SOLAR LIMITED, you can compare the effects of market volatilities on NIFTY SUMER and VIKRAM SOLAR 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 NIFTY SUMER with a short position of VIKRAM SOLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIFTY SUMER and VIKRAM SOLAR.

Diversification Opportunities for NIFTY SUMER and VIKRAM SOLAR

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NIFTY and VIKRAM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NIFTY SUMER DURABLES and VIKRAM SOLAR LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIKRAM SOLAR LIMITED and NIFTY SUMER 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 NIFTY SUMER DURABLES are associated (or correlated) with VIKRAM SOLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIKRAM SOLAR LIMITED has no effect on the direction of NIFTY SUMER i.e., NIFTY SUMER and VIKRAM SOLAR go up and down completely randomly.
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Pair Corralation between NIFTY SUMER and VIKRAM SOLAR

Assuming the 90 days trading horizon NIFTY SUMER DURABLES is expected to generate 0.31 times more return on investment than VIKRAM SOLAR. However, NIFTY SUMER DURABLES is 3.19 times less risky than VIKRAM SOLAR. It trades about -0.05 of its potential returns per unit of risk. VIKRAM SOLAR LIMITED is currently generating about -0.17 per unit of risk. If you would invest  3,853,460  in NIFTY SUMER DURABLES on August 27, 2025 and sell it today you would lose (87,710) from holding NIFTY SUMER DURABLES or give up 2.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy93.75%
ValuesDaily Returns

NIFTY SUMER DURABLES  vs.  VIKRAM SOLAR LIMITED

 Performance 
       Timeline  

NIFTY SUMER and VIKRAM SOLAR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NIFTY SUMER and VIKRAM SOLAR

The main advantage of trading using opposite NIFTY SUMER and VIKRAM SOLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIFTY SUMER position performs unexpectedly, VIKRAM SOLAR 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 VIKRAM SOLAR will offset losses from the drop in VIKRAM SOLAR's long position.
The idea behind NIFTY SUMER DURABLES and VIKRAM SOLAR 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.

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