Correlation Between KMH Hitech and Kisan Telecom

Can any of the company-specific risk be diversified away by investing in both KMH Hitech and Kisan Telecom 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 KMH Hitech and Kisan Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KMH Hitech Co and Kisan Telecom Co, you can compare the effects of market volatilities on KMH Hitech and Kisan Telecom 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 KMH Hitech with a short position of Kisan Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Kisan Telecom.

Diversification Opportunities for KMH Hitech and Kisan Telecom

0.73

Correlation Coefficient

KMH Hitech  Kisan Telecom

Poor diversification

The 3 months correlation between KMH and Kisan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Kisan Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kisan Telecom and KMH Hitech 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 KMH Hitech Co are associated (or correlated) with Kisan Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kisan Telecom has no effect on the direction of KMH Hitech i.e., KMH Hitech and Kisan Telecom go up and down completely randomly.

Pair Corralation between KMH Hitech and Kisan Telecom

Assuming the 90 days trading horizon KMH Hitech is expected to generate 1.99 times less return on investment than Kisan Telecom. But when comparing it to its historical volatility, KMH Hitech Co is 2.74 times less risky than Kisan Telecom. It trades about 0.09 of its potential returns per unit of risk. Kisan Telecom Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  175,300  in Kisan Telecom Co on December 22, 2024 and sell it today you would earn a total of  22,600  from holding Kisan Telecom Co or generate 12.89% return on investment over 90 days.

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

KMH Hitech Co  vs.  Kisan Telecom Co

KMH Hitech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KMH Hitech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KMH Hitech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kisan Telecom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kisan Telecom Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kisan Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KMH Hitech and Kisan Telecom

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

The idea behind KMH Hitech Co and Kisan Telecom Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.