Correlation Between Punjab National and Shivalik Bimetal

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

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

Diversification Opportunities for Punjab National and Shivalik Bimetal

0.03

Correlation Coefficient

Punjab National  Shivalik Bimetal

Significant diversification

The 3 months correlation between Punjab and Shivalik is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National Bank 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 Punjab National 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 Punjab National Bank 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 Punjab National i.e., Punjab National and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between Punjab National and Shivalik Bimetal

Assuming the 90 days trading horizon Punjab National Bank is expected to generate 1.06 times more return on investment than Shivalik Bimetal. However, Punjab National is 1.06 times more volatile than Shivalik Bimetal Controls. It trades about -0.05 of its potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about -0.32 per unit of risk. If you would invest  10,164  in Punjab National Bank on October 25, 2024 and sell it today you would lose (239.00) from holding Punjab National Bank or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Punjab National Bank  vs.  Shivalik Bimetal Controls

Punjab National Bank

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Punjab National Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Punjab National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unsteady 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 Punjab National and Shivalik Bimetal

The main advantage of trading using opposite Punjab National and Shivalik Bimetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab National 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 Punjab National Bank 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.