Correlation Between Shyam Metalics and Investment Trust

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

Diversification Opportunities for Shyam Metalics and Investment Trust

0.61

Correlation Coefficient

Shyam Metalics  Investment Trust

Poor diversification

The 3 months correlation between Shyam and Investment is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust 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 Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Investment Trust go up and down completely randomly.

Pair Corralation between Shyam Metalics and Investment Trust

Assuming the 90 days trading horizon Shyam Metalics and is expected to generate 0.78 times more return on investment than Investment Trust. However, Shyam Metalics and is 1.29 times less risky than Investment Trust. It trades about -0.04 of its potential returns per unit of risk. The Investment Trust is currently generating about -0.08 per unit of risk. If you would invest  82,100  in Shyam Metalics and on October 22, 2024 and sell it today you would lose (5,000) from holding Shyam Metalics and or give up 6.09% of portfolio value over 90 days.

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

Shyam Metalics and  vs.  The Investment Trust

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

Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

Pair Trading with Shyam Metalics and Investment Trust

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

The idea behind Shyam Metalics and and The 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.