Correlation Between Thomas Scott and Shaily Engineering

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Can any of the company-specific risk be diversified away by investing in both Thomas Scott and Shaily Engineering 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 Thomas Scott and Shaily Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thomas Scott Limited and Shaily Engineering Plastics, you can compare the effects of market volatilities on Thomas Scott and Shaily Engineering 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 Thomas Scott with a short position of Shaily Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomas Scott and Shaily Engineering.

Diversification Opportunities for Thomas Scott and Shaily Engineering

ThomasShailyDiversified AwayThomasShailyDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Thomas and Shaily is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Thomas Scott Limited and Shaily Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaily Engineering and Thomas Scott 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 Thomas Scott Limited are associated (or correlated) with Shaily Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaily Engineering has no effect on the direction of Thomas Scott i.e., Thomas Scott and Shaily Engineering go up and down completely randomly.

Pair Corralation between Thomas Scott and Shaily Engineering

Assuming the 90 days trading horizon Thomas Scott Limited is expected to generate 0.91 times more return on investment than Shaily Engineering. However, Thomas Scott Limited is 1.1 times less risky than Shaily Engineering. It trades about 0.33 of its potential returns per unit of risk. Shaily Engineering Plastics is currently generating about 0.11 per unit of risk. If you would invest  19,536  in Thomas Scott Limited on November 21, 2024 and sell it today you would earn a total of  19,969  from holding Thomas Scott Limited or generate 102.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Thomas Scott Limited  vs.  Shaily Engineering Plastics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100
JavaScript chart by amCharts 3.21.15THOMASCOTT SHAILY
       Timeline  
Thomas Scott Limited 

Risk-Adjusted Performance

Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Thomas Scott Limited are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Thomas Scott exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb200250300350400450500
Shaily Engineering 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward indicators, Shaily Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,1001,2001,3001,4001,5001,6001,700

Thomas Scott and Shaily Engineering Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.73-8.04-5.34-2.650.02.976.099.2112.3315.46 0.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15THOMASCOTT SHAILY
       Returns  

Pair Trading with Thomas Scott and Shaily Engineering

The main advantage of trading using opposite Thomas Scott and Shaily Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomas Scott position performs unexpectedly, Shaily Engineering 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 Shaily Engineering will offset losses from the drop in Shaily Engineering's long position.
The idea behind Thomas Scott Limited and Shaily Engineering Plastics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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