Correlation Between DCB Bank and Shivalik Bimetal

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

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

Diversification Opportunities for DCB Bank and Shivalik Bimetal

-0.4

Correlation Coefficient

DCB Bank  Shivalik Bimetal

Very good diversification

The 3 months correlation between DCB and Shivalik is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding DCB Bank Limited and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls and DCB 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 DCB Bank Limited are associated (or correlated) with Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of DCB Bank i.e., DCB Bank and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between DCB Bank and Shivalik Bimetal

Assuming the 90 days trading horizon DCB Bank Limited is expected to under-perform the Shivalik Bimetal. But the stock apears to be less risky and, when comparing its historical volatility, DCB Bank Limited is 1.46 times less risky than Shivalik Bimetal. The stock trades about -0.34 of its potential returns per unit of risk. The Shivalik Bimetal Controls is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  58,075  in Shivalik Bimetal Controls on October 10, 2024 and sell it today you would earn a total of  890.00  from holding Shivalik Bimetal Controls or generate 1.53% return on investment over 90 days.

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

DCB Bank Limited  vs.  Shivalik Bimetal Controls

DCB Bank Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DCB Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DCB Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with DCB Bank and Shivalik Bimetal

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

The idea behind DCB Bank Limited and Shivalik Bimetal Controls 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.