Correlation Between Shyam Metalics and Industrial Investment

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

Diversification Opportunities for Shyam Metalics and Industrial Investment

-0.27

Correlation Coefficient

Shyam Metalics  Industrial Investment

Very good diversification

The 3 months correlation between Shyam and Industrial is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment 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 Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Industrial Investment go up and down completely randomly.

Pair Corralation between Shyam Metalics and Industrial Investment

Assuming the 90 days trading horizon Shyam Metalics is expected to generate 6.99 times less return on investment than Industrial Investment. In addition to that, Shyam Metalics is 1.15 times more volatile than Industrial Investment Trust. It trades about 0.04 of its total potential returns per unit of risk. Industrial Investment Trust is currently generating about 0.33 per unit of volatility. If you would invest  26,375  in Industrial Investment Trust on August 31, 2024 and sell it today you would earn a total of  12,370  from holding Industrial Investment Trust or generate 46.9% return on investment over 90 days.

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

Shyam Metalics and  vs.  Industrial Investment Trust

Shyam Metalics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Metalics and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Industrial Investment

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shyam Metalics and Industrial Investment

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

The idea behind Shyam Metalics and and Industrial Investment Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.