Correlation Between Kewal Kiran and Shyam Metalics

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

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

Diversification Opportunities for Kewal Kiran and Shyam Metalics

0.9

Correlation Coefficient

Kewal Kiran  Shyam Metalics

Almost no diversification

The 3 months correlation between Kewal and Shyam is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Kewal Kiran 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 Kewal Kiran Clothing 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 Kewal Kiran i.e., Kewal Kiran and Shyam Metalics go up and down completely randomly.

Pair Corralation between Kewal Kiran and Shyam Metalics

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Shyam Metalics. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 1.37 times less risky than Shyam Metalics. The stock trades about 0.0 of its potential returns per unit of risk. The Shyam Metalics and is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  84,435  in Shyam Metalics and on September 12, 2024 and sell it today you would earn a total of  2,405  from holding Shyam Metalics and or generate 2.85% return on investment over 90 days.

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

Kewal Kiran Clothing  vs.  Shyam Metalics and

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kewal Kiran is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Shyam Metalics

Risk-Adjusted Performance

2 of 100

Insignificant

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

Pair Trading with Kewal Kiran and Shyam Metalics

The main advantage of trading using opposite Kewal Kiran and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kewal Kiran 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 Kewal Kiran Clothing 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.