Correlation Between Shaily Engineering and GPT Healthcare

Can any of the company-specific risk be diversified away by investing in both Shaily Engineering and GPT Healthcare 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 Shaily Engineering and GPT Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shaily Engineering Plastics and GPT Healthcare, you can compare the effects of market volatilities on Shaily Engineering and GPT Healthcare 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 Shaily Engineering with a short position of GPT Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaily Engineering and GPT Healthcare.

Diversification Opportunities for Shaily Engineering and GPT Healthcare

0.57

Correlation Coefficient

Shaily Engineering  GPT Healthcare

Very weak diversification

The 3 months correlation between Shaily and GPT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shaily Engineering Plastics and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Shaily Engineering 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 Shaily Engineering Plastics are associated (or correlated) with GPT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Healthcare has no effect on the direction of Shaily Engineering i.e., Shaily Engineering and GPT Healthcare go up and down completely randomly.

Pair Corralation between Shaily Engineering and GPT Healthcare

Assuming the 90 days trading horizon Shaily Engineering Plastics is expected to generate 6.73 times more return on investment than GPT Healthcare. However, Shaily Engineering is 6.73 times more volatile than GPT Healthcare. It trades about 0.05 of its potential returns per unit of risk. GPT Healthcare is currently generating about 0.0 per unit of risk. If you would invest  31,299  in Shaily Engineering Plastics on September 26, 2024 and sell it today you would earn a total of  115,746  from holding Shaily Engineering Plastics or generate 369.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	41.8%
Values	Daily Returns

Shaily Engineering Plastics  vs.  GPT Healthcare

Shaily Engineering

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Shaily Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

GPT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Shaily Engineering and GPT Healthcare

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

The idea behind Shaily Engineering Plastics and GPT Healthcare 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.