Correlation Between Procter Gamble and Shyam Metalics

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

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

Diversification Opportunities for Procter Gamble and Shyam Metalics

0.27

Correlation Coefficient

Procter Gamble  Shyam Metalics

Modest diversification

The 3 months correlation between Procter and Shyam is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health and Shyam Metalics and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Metalics and Procter Gamble 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 Procter Gamble Health are associated (or correlated) with Shyam Metalics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyam Metalics has no effect on the direction of Procter Gamble i.e., Procter Gamble and Shyam Metalics go up and down completely randomly.

Pair Corralation between Procter Gamble and Shyam Metalics

Assuming the 90 days trading horizon Procter Gamble is expected to generate 8.91 times less return on investment than Shyam Metalics. But when comparing it to its historical volatility, Procter Gamble Health is 1.27 times less risky than Shyam Metalics. It trades about 0.01 of its potential returns per unit of risk. Shyam Metalics and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  80,195  in Shyam Metalics and on September 3, 2024 and sell it today you would earn a total of  3,265  from holding Shyam Metalics and or generate 4.07% return on investment over 90 days.

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

Procter Gamble Health  vs.  Shyam Metalics and

Procter Gamble Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Procter Gamble is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Shyam Metalics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shyam Metalics and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Shyam Metalics is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Procter Gamble and Shyam Metalics

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

The idea behind Procter Gamble Health and Shyam Metalics and 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.