Correlation Between Indian Metals and Shyam Metalics

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

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

Diversification Opportunities for Indian Metals and Shyam Metalics

-0.14

Correlation Coefficient

Indian Metals  Shyam Metalics

Good diversification

The 3 months correlation between Indian and Shyam is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Indian Metals 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 Indian Metals Ferro 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 Indian Metals i.e., Indian Metals and Shyam Metalics go up and down completely randomly.

Pair Corralation between Indian Metals and Shyam Metalics

Assuming the 90 days trading horizon Indian Metals Ferro is expected to under-perform the Shyam Metalics. In addition to that, Indian Metals is 1.23 times more volatile than Shyam Metalics and. It trades about -0.15 of its total potential returns per unit of risk. Shyam Metalics and is currently generating about 0.13 per unit of volatility. If you would invest  71,519  in Shyam Metalics and on December 30, 2024 and sell it today you would earn a total of  13,811  from holding Shyam Metalics and or generate 19.31% return on investment over 90 days.

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

Indian Metals Ferro  vs.  Shyam Metalics and

Indian Metals Ferro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indian Metals Ferro 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Metalics and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Shyam Metalics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Metals and Shyam Metalics

The main advantage of trading using opposite Indian Metals and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Metals 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 Indian Metals Ferro 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.