Correlation Between Shivalik Bimetal and PNC Infratech

Can any of the company-specific risk be diversified away by investing in both Shivalik Bimetal and PNC Infratech 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 PNC Infratech 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 PNC Infratech Limited, you can compare the effects of market volatilities on Shivalik Bimetal and PNC Infratech 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 PNC Infratech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shivalik Bimetal and PNC Infratech.

Diversification Opportunities for Shivalik Bimetal and PNC Infratech

0.64

Correlation Coefficient

Shivalik Bimetal  PNC Infratech

Poor diversification

The 3 months correlation between Shivalik and PNC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and PNC Infratech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Infratech Limited 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 PNC Infratech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Infratech Limited has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and PNC Infratech go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and PNC Infratech

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to generate 0.65 times more return on investment than PNC Infratech. However, Shivalik Bimetal Controls is 1.55 times less risky than PNC Infratech. It trades about -0.03 of its potential returns per unit of risk. PNC Infratech Limited is currently generating about -0.12 per unit of risk. If you would invest  62,540  in Shivalik Bimetal Controls on September 27, 2024 and sell it today you would lose (4,045) from holding Shivalik Bimetal Controls or give up 6.47% of portfolio value over 90 days.

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

Shivalik Bimetal Controls  vs.  PNC Infratech Limited

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

PNC Infratech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PNC Infratech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Shivalik Bimetal and PNC Infratech

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

The idea behind Shivalik Bimetal Controls and PNC Infratech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.