Correlation Between IG Petrochemicals and Shyam Metalics

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

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

Diversification Opportunities for IG Petrochemicals and Shyam Metalics

0.46

Correlation Coefficient

IG Petrochemicals  Shyam Metalics

Very weak diversification

The 3 months correlation between IGPL and Shyam is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding IG Petrochemicals Limited and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and IG Petrochemicals 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 IG Petrochemicals Limited 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 IG Petrochemicals i.e., IG Petrochemicals and Shyam Metalics go up and down completely randomly.

Pair Corralation between IG Petrochemicals and Shyam Metalics

Assuming the 90 days trading horizon IG Petrochemicals is expected to generate 4.19 times less return on investment than Shyam Metalics. In addition to that, IG Petrochemicals is 1.01 times more volatile than Shyam Metalics and. It trades about 0.02 of its total potential returns per unit of risk. Shyam Metalics and is currently generating about 0.1 per unit of volatility. If you would invest  30,328  in Shyam Metalics and on September 19, 2024 and sell it today you would earn a total of  50,967  from holding Shyam Metalics and or generate 168.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

IG Petrochemicals Limited  vs.  Shyam Metalics and

IG Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IG Petrochemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 IG Petrochemicals and Shyam Metalics

The main advantage of trading using opposite IG Petrochemicals and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IG Petrochemicals 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 IG Petrochemicals Limited 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.