Correlation Between Shyam Metalics and Indraprastha Medical

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

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

Diversification Opportunities for Shyam Metalics and Indraprastha Medical

-0.08

Correlation Coefficient

Shyam Metalics  Indraprastha Medical

Good diversification

The 3 months correlation between Shyam and Indraprastha is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shyam Metalics and and Indraprastha Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indraprastha Medical and Shyam Metalics 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 Shyam Metalics and are associated (or correlated) with Indraprastha Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indraprastha Medical has no effect on the direction of Shyam Metalics i.e., Shyam Metalics and Indraprastha Medical go up and down completely randomly.

Pair Corralation between Shyam Metalics and Indraprastha Medical

Assuming the 90 days trading horizon Shyam Metalics and is expected to under-perform the Indraprastha Medical. But the stock apears to be less risky and, when comparing its historical volatility, Shyam Metalics and is 1.53 times less risky than Indraprastha Medical. The stock trades about -0.13 of its potential returns per unit of risk. The Indraprastha Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  44,975  in Indraprastha Medical on September 21, 2024 and sell it today you would earn a total of  4,055  from holding Indraprastha Medical or generate 9.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Shyam Metalics and  vs.  Indraprastha Medical

Shyam Metalics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyam Metalics and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Indraprastha Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Indraprastha Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shyam Metalics and Indraprastha Medical

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

The idea behind Shyam Metalics and and Indraprastha Medical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.