Correlation Between CSB Bank and Shaily Engineering

Can any of the company-specific risk be diversified away by investing in both CSB Bank and Shaily Engineering 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 CSB Bank and Shaily Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSB Bank Limited and Shaily Engineering Plastics, you can compare the effects of market volatilities on CSB Bank and Shaily Engineering 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 CSB Bank with a short position of Shaily Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSB Bank and Shaily Engineering.

Diversification Opportunities for CSB Bank and Shaily Engineering

-0.2

Correlation Coefficient

CSB Bank  Shaily Engineering

Good diversification

The 3 months correlation between CSB and Shaily is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CSB Bank Limited and Shaily Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaily Engineering and CSB Bank 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 CSB Bank Limited are associated (or correlated) with Shaily Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaily Engineering has no effect on the direction of CSB Bank i.e., CSB Bank and Shaily Engineering go up and down completely randomly.

Pair Corralation between CSB Bank and Shaily Engineering

Assuming the 90 days trading horizon CSB Bank Limited is expected to generate 0.55 times more return on investment than Shaily Engineering. However, CSB Bank Limited is 1.83 times less risky than Shaily Engineering. It trades about 0.2 of its potential returns per unit of risk. Shaily Engineering Plastics is currently generating about 0.01 per unit of risk. If you would invest  36,025  in CSB Bank Limited on April 20, 2025 and sell it today you would earn a total of  7,055  from holding CSB Bank Limited or generate 19.58% return on investment over 90 days.

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

CSB Bank Limited  vs.  Shaily Engineering Plastics

CSB Bank Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, CSB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Shaily Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shaily Engineering Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Shaily Engineering is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CSB Bank and Shaily Engineering

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

The idea behind CSB Bank Limited and Shaily Engineering Plastics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.