Correlation Between Shivalik Bimetal and Southern Petrochemicals

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

Diversification Opportunities for Shivalik Bimetal and Southern Petrochemicals

0.74

Correlation Coefficient

Shivalik Bimetal  Southern Petrochemicals

Poor diversification

The 3 months correlation between Shivalik and Southern is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals 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 Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and Southern Petrochemicals go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and Southern Petrochemicals

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to under-perform the Southern Petrochemicals. But the stock apears to be less risky and, when comparing its historical volatility, Shivalik Bimetal Controls is 1.06 times less risky than Southern Petrochemicals. The stock trades about -0.14 of its potential returns per unit of risk. The Southern Petrochemicals Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,584  in Southern Petrochemicals Industries on October 22, 2024 and sell it today you would lose (11.00) from holding Southern Petrochemicals Industries or give up 0.15% of portfolio value over 90 days.

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

Shivalik Bimetal Controls  vs.  Southern Petrochemicals Indust

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.

Southern Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shivalik Bimetal and Southern Petrochemicals

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

The idea behind Shivalik Bimetal Controls and Southern Petrochemicals Industries 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.