Correlation Between Steel Authority and Shyam Metalics

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

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

Diversification Opportunities for Steel Authority and Shyam Metalics

0.56

Correlation Coefficient

Steel Authority  Shyam Metalics

Very weak diversification

The 3 months correlation between Steel and Shyam is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Steel Authority 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 Steel Authority of 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 Steel Authority i.e., Steel Authority and Shyam Metalics go up and down completely randomly.

Pair Corralation between Steel Authority and Shyam Metalics

Assuming the 90 days trading horizon Steel Authority of is expected to under-perform the Shyam Metalics. But the stock apears to be less risky and, when comparing its historical volatility, Steel Authority of is 1.02 times less risky than Shyam Metalics. The stock trades about -0.04 of its potential returns per unit of risk. The Shyam Metalics and is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  82,720  in Shyam Metalics and on September 4, 2024 and sell it today you would lose (920.00) from holding Shyam Metalics and or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Steel Authority of  vs.  Shyam Metalics and

Steel Authority

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Steel Authority is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Steel Authority and Shyam Metalics

The main advantage of trading using opposite Steel Authority and Shyam Metalics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority 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 Steel Authority of 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..