Correlation Between Agarwal Industrial and Shyam Metalics

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

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

Diversification Opportunities for Agarwal Industrial and Shyam Metalics

0.14

Correlation Coefficient

Agarwal Industrial  Shyam Metalics

Average diversification

The 3 months correlation between Agarwal and Shyam is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Agarwal Industrial 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 Agarwal Industrial are associated (or correlated) with Shyam Metalics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyam Metalics has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Shyam Metalics go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Shyam Metalics

Assuming the 90 days trading horizon Agarwal Industrial is expected to under-perform the Shyam Metalics. In addition to that, Agarwal Industrial is 1.08 times more volatile than Shyam Metalics and. It trades about -0.02 of its total potential returns per unit of risk. Shyam Metalics and is currently generating about 0.04 per unit of volatility. If you would invest  80,205  in Shyam Metalics and on August 31, 2024 and sell it today you would earn a total of  3,415  from holding Shyam Metalics and or generate 4.26% return on investment over 90 days.

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

Agarwal Industrial  vs.  Shyam Metalics and

Agarwal Industrial

Risk-Adjusted Performance

0 of 100

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Shyam Metalics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Metalics and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Shyam Metalics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Agarwal Industrial and Shyam Metalics

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

The idea behind Agarwal Industrial and Shyam Metalics and 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.