Correlation Between Thermax and Shivalik Bimetal

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

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

Diversification Opportunities for Thermax and Shivalik Bimetal

0.87

Correlation Coefficient

Thermax  Shivalik Bimetal

Very poor diversification

The 3 months correlation between Thermax and Shivalik is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thermax Limited and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls and Thermax 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 Thermax Limited are associated (or correlated) with Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of Thermax i.e., Thermax and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between Thermax and Shivalik Bimetal

Assuming the 90 days trading horizon Thermax Limited is expected to under-perform the Shivalik Bimetal. In addition to that, Thermax is 1.02 times more volatile than Shivalik Bimetal Controls. It trades about -0.11 of its total potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about -0.11 per unit of volatility. If you would invest  57,269  in Shivalik Bimetal Controls on December 26, 2024 and sell it today you would lose (12,289) from holding Shivalik Bimetal Controls or give up 21.46% of portfolio value over 90 days.

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

Thermax Limited  vs.  Shivalik Bimetal Controls

Thermax Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermax Limited 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 primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shivalik Bimetal Controls

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Thermax and Shivalik Bimetal

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

The idea behind Thermax Limited and Shivalik Bimetal Controls 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.