Correlation Between Hi Tech and Shyam Telecom

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

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

Diversification Opportunities for Hi Tech and Shyam Telecom

-0.81

Correlation Coefficient

Hi Tech  Shyam Telecom

Pay attention - limited upside

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

Pair Corralation between Hi Tech and Shyam Telecom

Assuming the 90 days trading horizon Hi Tech Pipes Limited is expected to under-perform the Shyam Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Pipes Limited is 1.53 times less risky than Shyam Telecom. The stock trades about -0.16 of its potential returns per unit of risk. The Shyam Telecom Limited is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,365  in Shyam Telecom Limited on September 24, 2024 and sell it today you would earn a total of  1,155  from holding Shyam Telecom Limited or generate 84.62% return on investment over 90 days.

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

Hi Tech Pipes Limited  vs.  Shyam Telecom Limited

Hi Tech Pipes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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.

Shyam Telecom Limited

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Telecom Limited are ranked lower than 24 (%) 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.

Pair Trading with Hi Tech and Shyam Telecom

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

The idea behind Hi Tech Pipes Limited and Shyam Telecom 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.