Correlation Between Khiron Life and RELIANCE STEEL

Can any of the company-specific risk be diversified away by investing in both Khiron Life and RELIANCE STEEL 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 Khiron Life and RELIANCE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Khiron Life Sciences and RELIANCE STEEL AL, you can compare the effects of market volatilities on Khiron Life and RELIANCE STEEL 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 Khiron Life with a short position of RELIANCE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and RELIANCE STEEL.

Diversification Opportunities for Khiron Life and RELIANCE STEEL

0.0

Correlation Coefficient

Khiron Life  RELIANCE STEEL

Pay attention - limited upside

The 3 months correlation between Khiron and RELIANCE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and RELIANCE STEEL AL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STEEL AL and Khiron Life 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 Khiron Life Sciences are associated (or correlated) with RELIANCE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STEEL AL has no effect on the direction of Khiron Life i.e., Khiron Life and RELIANCE STEEL go up and down completely randomly.

Pair Corralation between Khiron Life and RELIANCE STEEL

If you would invest  24,261  in RELIANCE STEEL AL on September 4, 2024 and sell it today you would earn a total of  6,159  from holding RELIANCE STEEL AL or generate 25.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Khiron Life Sciences  vs.  RELIANCE STEEL AL

Khiron Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khiron Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Khiron Life is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

RELIANCE STEEL AL

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RELIANCE STEEL AL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, RELIANCE STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khiron Life and RELIANCE STEEL

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

The idea behind Khiron Life Sciences and RELIANCE STEEL AL 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.