Correlation Between Hisar Metal and Shyam Metalics

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

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

Diversification Opportunities for Hisar Metal and Shyam Metalics

0.75

Correlation Coefficient

Hisar Metal  Shyam Metalics

Poor diversification

The 3 months correlation between Hisar and Shyam is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Hisar Metal 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 Hisar Metal Industries 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 Hisar Metal i.e., Hisar Metal and Shyam Metalics go up and down completely randomly.

Pair Corralation between Hisar Metal and Shyam Metalics

Assuming the 90 days trading horizon Hisar Metal Industries is expected to generate 1.26 times more return on investment than Shyam Metalics. However, Hisar Metal is 1.26 times more volatile than Shyam Metalics and. It trades about 0.03 of its potential returns per unit of risk. Shyam Metalics and is currently generating about -0.04 per unit of risk. If you would invest  18,974  in Hisar Metal Industries on September 19, 2024 and sell it today you would earn a total of  473.00  from holding Hisar Metal Industries or generate 2.49% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Shyam Metalics and

Hisar Metal Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 rather sound technical and fundamental indicators, Shyam Metalics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hisar Metal and Shyam Metalics

The main advantage of trading using opposite Hisar Metal and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisar Metal 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 Hisar Metal Industries 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.