Correlation Between Shyam Metalics and Niraj Ispat

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

Diversification Opportunities for Shyam Metalics and Niraj Ispat

-0.63

Correlation Coefficient

Shyam Metalics  Niraj Ispat

Excellent diversification

The 3 months correlation between Shyam and Niraj is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat Industries 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Niraj Ispat go up and down completely randomly.

Pair Corralation between Shyam Metalics and Niraj Ispat

Assuming the 90 days trading horizon Shyam Metalics and is expected to under-perform the Niraj Ispat. But the stock apears to be less risky and, when comparing its historical volatility, Shyam Metalics and is 1.26 times less risky than Niraj Ispat. The stock trades about -0.27 of its potential returns per unit of risk. The Niraj Ispat Industries is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  21,442  in Niraj Ispat Industries on September 24, 2024 and sell it today you would earn a total of  3,076  from holding Niraj Ispat Industries or generate 14.35% return on investment over 90 days.

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

Shyam Metalics and  vs.  Niraj Ispat Industries

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

Niraj Ispat Industries

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shyam Metalics and Niraj Ispat

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

The idea behind Shyam Metalics and and Niraj Ispat Industries 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.