Correlation Between Shivalik Bimetal and Garuda Construction

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

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

Diversification Opportunities for Shivalik Bimetal and Garuda Construction

0.32

Correlation Coefficient

Shivalik Bimetal  Garuda Construction

Weak diversification

The 3 months correlation between Shivalik and Garuda is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction and Shivalik Bimetal 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 Shivalik Bimetal Controls are associated (or correlated) with Garuda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Construction has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and Garuda Construction go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and Garuda Construction

Assuming the 90 days trading horizon Shivalik Bimetal is expected to generate 13.75 times less return on investment than Garuda Construction. But when comparing it to its historical volatility, Shivalik Bimetal Controls is 1.86 times less risky than Garuda Construction. It trades about 0.01 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,636  in Garuda Construction Engineering on September 21, 2024 and sell it today you would earn a total of  1,191  from holding Garuda Construction Engineering or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.19%
Values	Daily Returns

Shivalik Bimetal Controls  vs.  Garuda Construction Engineerin

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Shivalik Bimetal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Garuda Construction

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shivalik Bimetal and Garuda Construction

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

The idea behind Shivalik Bimetal Controls and Garuda Construction Engineering 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.