Correlation Between Shivalik Bimetal and Kamat Hotels

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

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

Diversification Opportunities for Shivalik Bimetal and Kamat Hotels

-0.42

Correlation Coefficient

Shivalik Bimetal  Kamat Hotels

Very good diversification

The 3 months correlation between Shivalik and Kamat is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and Kamat Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamat Hotels Limited and Shivalik Bimetal 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 Shivalik Bimetal Controls are associated (or correlated) with Kamat Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamat Hotels Limited has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and Kamat Hotels go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and Kamat Hotels

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to under-perform the Kamat Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Shivalik Bimetal Controls is 1.07 times less risky than Kamat Hotels. The stock trades about -0.08 of its potential returns per unit of risk. The Kamat Hotels Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  20,631  in Kamat Hotels Limited on October 6, 2024 and sell it today you would earn a total of  3,336  from holding Kamat Hotels Limited or generate 16.17% return on investment over 90 days.

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

Shivalik Bimetal Controls  vs.  Kamat Hotels Limited

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 comparatively stable basic indicators, Shivalik Bimetal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kamat Hotels Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shivalik Bimetal and Kamat Hotels

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

The idea behind Shivalik Bimetal Controls and Kamat Hotels Limited 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .