Correlation Between Shivalik Bimetal and KIOCL

Can any of the company-specific risk be diversified away by investing in both Shivalik Bimetal and KIOCL 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 KIOCL 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 KIOCL Limited, you can compare the effects of market volatilities on Shivalik Bimetal and KIOCL 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 KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shivalik Bimetal and KIOCL.

Diversification Opportunities for Shivalik Bimetal and KIOCL

-0.14

Correlation Coefficient

Shivalik Bimetal  KIOCL

Good diversification

The 3 months correlation between Shivalik and KIOCL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL 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 KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and KIOCL go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and KIOCL

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to under-perform the KIOCL. But the stock apears to be less risky and, when comparing its historical volatility, Shivalik Bimetal Controls is 1.51 times less risky than KIOCL. The stock trades about -0.06 of its potential returns per unit of risk. The KIOCL Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  39,410  in KIOCL Limited on September 30, 2024 and sell it today you would lose (3,845) from holding KIOCL Limited or give up 9.76% of portfolio value over 90 days.

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

Shivalik Bimetal Controls  vs.  KIOCL 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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

KIOCL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shivalik Bimetal and KIOCL

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

The idea behind Shivalik Bimetal Controls and KIOCL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.