Correlation Between Shyam Metalics and Gillette India

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

Diversification Opportunities for Shyam Metalics and Gillette India

0.01

Correlation Coefficient

Shyam Metalics  Gillette India

Significant diversification

The 3 months correlation between Shyam and Gillette is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Gillette India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gillette India 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 Gillette India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gillette India has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Gillette India go up and down completely randomly.

Pair Corralation between Shyam Metalics and Gillette India

Assuming the 90 days trading horizon Shyam Metalics and is expected to under-perform the Gillette India. But the stock apears to be less risky and, when comparing its historical volatility, Shyam Metalics and is 1.11 times less risky than Gillette India. The stock trades about -0.17 of its potential returns per unit of risk. The Gillette India Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  997,300  in Gillette India Limited on October 12, 2024 and sell it today you would lose (25,570) from holding Gillette India Limited or give up 2.56% of portfolio value over 90 days.

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

Shyam Metalics and  vs.  Gillette India Limited

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gillette India

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gillette India Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gillette India may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shyam Metalics and Gillette India

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

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