Correlation Between Shyam Metalics and Diligent Media

Can any of the company-specific risk be diversified away by investing in both Shyam Metalics and Diligent Media 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 Shyam Metalics and Diligent Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shyam Metalics and and Diligent Media, you can compare the effects of market volatilities on Shyam Metalics and Diligent Media 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 Shyam Metalics with a short position of Diligent Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyam Metalics and Diligent Media.

Diversification Opportunities for Shyam Metalics and Diligent Media

-0.54

Correlation Coefficient

Shyam Metalics  Diligent Media

Excellent diversification

The 3 months correlation between Shyam and Diligent is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media and Shyam Metalics 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 Shyam Metalics and are associated (or correlated) with Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Diligent Media go up and down completely randomly.

Pair Corralation between Shyam Metalics and Diligent Media

Assuming the 90 days trading horizon Shyam Metalics and is expected to under-perform the Diligent Media. But the stock apears to be less risky and, when comparing its historical volatility, Shyam Metalics and is 2.15 times less risky than Diligent Media. The stock trades about -0.02 of its potential returns per unit of risk. The Diligent Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  478.00  in Diligent Media on October 27, 2024 and sell it today you would earn a total of  77.00  from holding Diligent Media or generate 16.11% return on investment over 90 days.

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

Shyam Metalics and  vs.  Diligent Media

Shyam Metalics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyam Metalics and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Shyam Metalics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Diligent Media

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Diligent Media demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shyam Metalics and Diligent Media

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

The idea behind Shyam Metalics and and Diligent Media 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.