Correlation Between Garuda Construction and Shaily Engineering

Can any of the company-specific risk be diversified away by investing in both Garuda Construction 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 Garuda Construction and Shaily Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garuda Construction Engineering and Shaily Engineering Plastics, you can compare the effects of market volatilities on Garuda Construction 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 Garuda Construction with a short position of Shaily Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Construction and Shaily Engineering.

Diversification Opportunities for Garuda Construction and Shaily Engineering

-0.44

Correlation Coefficient

Garuda Construction  Shaily Engineering

Very good diversification

The 3 months correlation between Garuda and Shaily is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and Shaily Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaily Engineering and Garuda Construction 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 Garuda Construction Engineering 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 Garuda Construction i.e., Garuda Construction and Shaily Engineering go up and down completely randomly.

Pair Corralation between Garuda Construction and Shaily Engineering

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to under-perform the Shaily Engineering. In addition to that, Garuda Construction is 1.24 times more volatile than Shaily Engineering Plastics. It trades about -0.07 of its total potential returns per unit of risk. Shaily Engineering Plastics is currently generating about 0.12 per unit of volatility. If you would invest  146,575  in Shaily Engineering Plastics on December 30, 2024 and sell it today you would earn a total of  36,160  from holding Shaily Engineering Plastics or generate 24.67% return on investment over 90 days.

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

Garuda Construction Engineerin  vs.  Shaily Engineering Plastics

Garuda Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garuda Construction Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shaily Engineering

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 9 (%) 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.

Pair Trading with Garuda Construction and Shaily Engineering

The main advantage of trading using opposite Garuda Construction and Shaily Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Construction 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 Garuda Construction Engineering 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.

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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.