Correlation Between Central Bank and Shyam Metalics

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

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

Diversification Opportunities for Central Bank and Shyam Metalics

0.62

Correlation Coefficient

Central Bank  Shyam Metalics

Poor diversification

The 3 months correlation between Central and Shyam is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Central Bank of and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Central Bank 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 Central Bank of 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 Central Bank i.e., Central Bank and Shyam Metalics go up and down completely randomly.

Pair Corralation between Central Bank and Shyam Metalics

Assuming the 90 days trading horizon Central Bank of is expected to generate 1.27 times more return on investment than Shyam Metalics. However, Central Bank is 1.27 times more volatile than Shyam Metalics and. It trades about -0.04 of its potential returns per unit of risk. Shyam Metalics and is currently generating about -0.08 per unit of risk. If you would invest  5,581  in Central Bank of on October 9, 2024 and sell it today you would lose (269.00) from holding Central Bank of or give up 4.82% of portfolio value over 90 days.

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

Central Bank of  vs.  Shyam Metalics and

Central Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Shyam Metalics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyam Metalics and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Central Bank and Shyam Metalics

The main advantage of trading using opposite Central Bank and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Bank 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 Central Bank of 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.