Correlation Between Arrow Greentech and Shaily Engineering

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

By analyzing existing cross correlation between Arrow Greentech Limited and Shaily Engineering Plastics, you can compare the effects of market volatilities on Arrow Greentech 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 Arrow Greentech with a short position of Shaily Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Greentech and Shaily Engineering.

Diversification Opportunities for Arrow Greentech and Shaily Engineering

0.21

Correlation Coefficient

Arrow Greentech  Shaily Engineering

Modest diversification

The 3 months correlation between Arrow and Shaily is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Greentech 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 Arrow Greentech 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 Arrow Greentech 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 Arrow Greentech i.e., Arrow Greentech and Shaily Engineering go up and down completely randomly.

Pair Corralation between Arrow Greentech and Shaily Engineering

Assuming the 90 days trading horizon Arrow Greentech is expected to generate 1.51 times less return on investment than Shaily Engineering. In addition to that, Arrow Greentech is 1.3 times more volatile than Shaily Engineering Plastics. It trades about 0.08 of its total potential returns per unit of risk. Shaily Engineering Plastics is currently generating about 0.16 per unit of volatility. If you would invest  29,546  in Shaily Engineering Plastics on September 30, 2024 and sell it today you would earn a total of  117,164  from holding Shaily Engineering Plastics or generate 396.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.45%
Values	Daily Returns

Arrow Greentech Limited  vs.  Shaily Engineering Plastics

Arrow Greentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Shaily Engineering

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shaily Engineering Plastics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Shaily Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Greentech and Shaily Engineering

The main advantage of trading using opposite Arrow Greentech and Shaily Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Greentech 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 Arrow Greentech 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.