Correlation Between EMBASSY OFFICE and Shyam Metalics

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

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

Diversification Opportunities for EMBASSY OFFICE and Shyam Metalics

0.4

Correlation Coefficient

EMBASSY OFFICE  Shyam Metalics

Very weak diversification

The 3 months correlation between EMBASSY and Shyam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding EMBASSY OFFICE PARKS and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and EMBASSY OFFICE 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 EMBASSY OFFICE PARKS 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 EMBASSY OFFICE i.e., EMBASSY OFFICE and Shyam Metalics go up and down completely randomly.

Pair Corralation between EMBASSY OFFICE and Shyam Metalics

Assuming the 90 days trading horizon EMBASSY OFFICE PARKS is expected to generate 0.55 times more return on investment than Shyam Metalics. However, EMBASSY OFFICE PARKS is 1.82 times less risky than Shyam Metalics. It trades about -0.03 of its potential returns per unit of risk. Shyam Metalics and is currently generating about -0.1 per unit of risk. If you would invest  36,553  in EMBASSY OFFICE PARKS on November 29, 2024 and sell it today you would lose (1,042) from holding EMBASSY OFFICE PARKS or give up 2.85% of portfolio value over 90 days.

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

EMBASSY OFFICE PARKS  vs.  Shyam Metalics and

EMBASSY OFFICE PARKS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMBASSY OFFICE PARKS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EMBASSY OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shyam Metalics

Risk-Adjusted Performance

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EMBASSY OFFICE and Shyam Metalics

The main advantage of trading using opposite EMBASSY OFFICE and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBASSY OFFICE 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 EMBASSY OFFICE PARKS 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.