Correlation Between Shivalik Bimetal and VA Tech

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

Diversification Opportunities for Shivalik Bimetal and VA Tech

0.1

Correlation Coefficient

Shivalik Bimetal  VA Tech

Average diversification

The 3 months correlation between Shivalik and WABAG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and VA Tech Wabag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VA Tech Wabag 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 VA Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VA Tech Wabag has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and VA Tech go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and VA Tech

Assuming the 90 days trading horizon Shivalik Bimetal is expected to generate 3.73 times less return on investment than VA Tech. But when comparing it to its historical volatility, Shivalik Bimetal Controls is 1.18 times less risky than VA Tech. It trades about 0.05 of its potential returns per unit of risk. VA Tech Wabag is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  140,295  in VA Tech Wabag on September 13, 2024 and sell it today you would earn a total of  43,565  from holding VA Tech Wabag or generate 31.05% return on investment over 90 days.

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

Shivalik Bimetal Controls  vs.  VA Tech Wabag

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.

VA Tech Wabag

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VA Tech Wabag are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, VA Tech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shivalik Bimetal and VA Tech

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

The idea behind Shivalik Bimetal Controls and VA Tech Wabag 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .