Correlation Between Shivalik Bimetal and MIC Electronics

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

Diversification Opportunities for Shivalik Bimetal and MIC Electronics

0.44

Correlation Coefficient

Shivalik Bimetal  MIC Electronics

Very weak diversification

The 3 months correlation between Shivalik and MIC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics 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 MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and MIC Electronics go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and MIC Electronics

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to under-perform the MIC Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Shivalik Bimetal Controls is 1.19 times less risky than MIC Electronics. The stock trades about 0.0 of its potential returns per unit of risk. The MIC Electronics Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,051  in MIC Electronics Limited on September 2, 2024 and sell it today you would earn a total of  347.00  from holding MIC Electronics Limited or generate 4.31% return on investment over 90 days.

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

Shivalik Bimetal Controls  vs.  MIC Electronics 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.

MIC Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MIC Electronics Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, MIC Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shivalik Bimetal and MIC Electronics

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

The idea behind Shivalik Bimetal Controls and MIC Electronics 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.