Correlation Between Gujarat Lease and Shyam Metalics

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

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

Diversification Opportunities for Gujarat Lease and Shyam Metalics

0.67

Correlation Coefficient

Gujarat Lease  Shyam Metalics

Poor diversification

The 3 months correlation between Gujarat and Shyam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Gujarat Lease 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 Gujarat Lease Financing 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 Gujarat Lease i.e., Gujarat Lease and Shyam Metalics go up and down completely randomly.

Pair Corralation between Gujarat Lease and Shyam Metalics

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to under-perform the Shyam Metalics. In addition to that, Gujarat Lease is 1.35 times more volatile than Shyam Metalics and. It trades about -0.28 of its total potential returns per unit of risk. Shyam Metalics and is currently generating about -0.09 per unit of volatility. If you would invest  81,565  in Shyam Metalics and on December 2, 2024 and sell it today you would lose (10,430) from holding Shyam Metalics and or give up 12.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Gujarat Lease Financing  vs.  Shyam Metalics and

Gujarat Lease Financing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Lease Financing 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gujarat Lease and Shyam Metalics

The main advantage of trading using opposite Gujarat Lease and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Lease 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 Gujarat Lease Financing 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.