Correlation Between Banka BioLoo and Shaily Engineering

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

Diversification Opportunities for Banka BioLoo and Shaily Engineering

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Banka and Shaily is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Banka BioLoo Limited and Shaily Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaily Engineering and Banka BioLoo 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 Banka BioLoo Limited are associated (or correlated) with Shaily Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaily Engineering has no effect on the direction of Banka BioLoo i.e., Banka BioLoo and Shaily Engineering go up and down completely randomly.

Pair Corralation between Banka BioLoo and Shaily Engineering

Assuming the 90 days trading horizon Banka BioLoo Limited is expected to under-perform the Shaily Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Banka BioLoo Limited is 1.6 times less risky than Shaily Engineering. The stock trades about -0.26 of its potential returns per unit of risk. The Shaily Engineering Plastics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  134,545  in Shaily Engineering Plastics on October 10, 2024 and sell it today you would earn a total of  16,440  from holding Shaily Engineering Plastics or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Banka BioLoo Limited  vs.  Shaily Engineering Plastics

 Performance 
       Timeline  
Banka BioLoo Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Banka BioLoo Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Shaily Engineering 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Shaily Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Banka BioLoo and Shaily Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banka BioLoo and Shaily Engineering

The main advantage of trading using opposite Banka BioLoo and Shaily Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banka BioLoo position performs unexpectedly, Shaily Engineering 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 Shaily Engineering will offset losses from the drop in Shaily Engineering's long position.
The idea behind Banka BioLoo Limited and Shaily Engineering Plastics 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.
Check out your portfolio center.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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