Correlation Between Shyam Metalics and Kotak Mahindra

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

Diversification Opportunities for Shyam Metalics and Kotak Mahindra

0.2

Correlation Coefficient

Shyam Metalics  Kotak Mahindra

Modest diversification

The 3 months correlation between Shyam and Kotak is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Kotak Mahindra Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kotak Mahindra Bank 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 Kotak Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kotak Mahindra Bank has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Kotak Mahindra go up and down completely randomly.

Pair Corralation between Shyam Metalics and Kotak Mahindra

Assuming the 90 days trading horizon Shyam Metalics and is expected to under-perform the Kotak Mahindra. In addition to that, Shyam Metalics is 1.31 times more volatile than Kotak Mahindra Bank. It trades about 0.0 of its total potential returns per unit of risk. Kotak Mahindra Bank is currently generating about 0.08 per unit of volatility. If you would invest  176,500  in Kotak Mahindra Bank on October 24, 2024 and sell it today you would earn a total of  12,830  from holding Kotak Mahindra Bank or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Shyam Metalics and  vs.  Kotak Mahindra Bank

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kotak Mahindra Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kotak Mahindra Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kotak Mahindra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shyam Metalics and Kotak Mahindra

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

The idea behind Shyam Metalics and and Kotak Mahindra Bank 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.