Correlation Between Shivalik Bimetal and Sonata Software

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

Diversification Opportunities for Shivalik Bimetal and Sonata Software

-0.27

Correlation Coefficient

Shivalik Bimetal  Sonata Software

Very good diversification

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

Pair Corralation between Shivalik Bimetal and Sonata Software

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to generate 1.1 times more return on investment than Sonata Software. However, Shivalik Bimetal is 1.1 times more volatile than Sonata Software Limited. It trades about 0.05 of its potential returns per unit of risk. Sonata Software Limited is currently generating about 0.01 per unit of risk. If you would invest  57,424  in Shivalik Bimetal Controls on September 13, 2024 and sell it today you would earn a total of  3,521  from holding Shivalik Bimetal Controls or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Shivalik Bimetal Controls  vs.  Sonata Software Limited

Shivalik Bimetal Controls

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shivalik Bimetal Controls are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Shivalik Bimetal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sonata Software

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sonata Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sonata Software is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shivalik Bimetal and Sonata Software

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

The idea behind Shivalik Bimetal Controls and Sonata Software 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.