Correlation Between Jayant Agro and Shivalik Bimetal

Can any of the company-specific risk be diversified away by investing in both Jayant Agro and Shivalik Bimetal 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 Jayant Agro and Shivalik Bimetal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jayant Agro Organics and Shivalik Bimetal Controls, you can compare the effects of market volatilities on Jayant Agro and Shivalik Bimetal 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 Jayant Agro with a short position of Shivalik Bimetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jayant Agro and Shivalik Bimetal.

Diversification Opportunities for Jayant Agro and Shivalik Bimetal

0.2

Correlation Coefficient

Jayant Agro  Shivalik Bimetal

Modest diversification

The 3 months correlation between Jayant and Shivalik is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jayant Agro Organics and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls and Jayant Agro 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 Jayant Agro Organics are associated (or correlated) with Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of Jayant Agro i.e., Jayant Agro and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between Jayant Agro and Shivalik Bimetal

Assuming the 90 days trading horizon Jayant Agro is expected to generate 1.07 times less return on investment than Shivalik Bimetal. But when comparing it to its historical volatility, Jayant Agro Organics is 1.04 times less risky than Shivalik Bimetal. It trades about 0.04 of its potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  38,582  in Shivalik Bimetal Controls on October 12, 2024 and sell it today you would earn a total of  18,298  from holding Shivalik Bimetal Controls or generate 47.43% return on investment over 90 days.

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

Jayant Agro Organics  vs.  Shivalik Bimetal Controls

Jayant Agro Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jayant Agro Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jayant Agro is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Jayant Agro and Shivalik Bimetal

The main advantage of trading using opposite Jayant Agro and Shivalik Bimetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jayant Agro position performs unexpectedly, Shivalik Bimetal 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 Shivalik Bimetal will offset losses from the drop in Shivalik Bimetal's long position.

The idea behind Jayant Agro Organics and Shivalik Bimetal Controls 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.