Correlation Between Shyam Telecom and GM Breweries

Can any of the company-specific risk be diversified away by investing in both Shyam Telecom and GM Breweries 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 Telecom and GM Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shyam Telecom Limited and GM Breweries Limited, you can compare the effects of market volatilities on Shyam Telecom and GM Breweries 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 Telecom with a short position of GM Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyam Telecom and GM Breweries.

Diversification Opportunities for Shyam Telecom and GM Breweries

-0.62

Correlation Coefficient

Shyam Telecom  GM Breweries

Excellent diversification

The 3 months correlation between Shyam and GMBREW is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Telecom Limited and GM Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GM Breweries Limited and Shyam Telecom 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 Telecom Limited are associated (or correlated) with GM Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GM Breweries Limited has no effect on the direction of Shyam Telecom i.e., Shyam Telecom and GM Breweries go up and down completely randomly.

Pair Corralation between Shyam Telecom and GM Breweries

Assuming the 90 days trading horizon Shyam Telecom Limited is expected to under-perform the GM Breweries. But the stock apears to be less risky and, when comparing its historical volatility, Shyam Telecom Limited is 1.02 times less risky than GM Breweries. The stock trades about -0.59 of its potential returns per unit of risk. The GM Breweries Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  75,835  in GM Breweries Limited on September 22, 2024 and sell it today you would earn a total of  5,285  from holding GM Breweries Limited or generate 6.97% return on investment over 90 days.

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

Shyam Telecom Limited  vs.  GM Breweries Limited

Shyam Telecom Limited

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Telecom Limited are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Shyam Telecom exhibited solid returns over the last few months and may actually be approaching a breakup point.

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GM Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shyam Telecom and GM Breweries

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

The idea behind Shyam Telecom Limited and GM Breweries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.