Correlation Between Action Construction and Kewal Kiran

Can any of the company-specific risk be diversified away by investing in both Action Construction and Kewal Kiran 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 Action Construction and Kewal Kiran into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Action Construction Equipment and Kewal Kiran Clothing, you can compare the effects of market volatilities on Action Construction and Kewal Kiran 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 Action Construction with a short position of Kewal Kiran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Action Construction and Kewal Kiran.

Diversification Opportunities for Action Construction and Kewal Kiran

0.18

Correlation Coefficient

Action Construction  Kewal Kiran

Average diversification

The 3 months correlation between Action and Kewal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Action Construction Equipment and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and Action Construction 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 Action Construction Equipment are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Action Construction i.e., Action Construction and Kewal Kiran go up and down completely randomly.

Pair Corralation between Action Construction and Kewal Kiran

Assuming the 90 days trading horizon Action Construction Equipment is expected to generate 1.62 times more return on investment than Kewal Kiran. However, Action Construction is 1.62 times more volatile than Kewal Kiran Clothing. It trades about 0.12 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.03 per unit of risk. If you would invest  31,684  in Action Construction Equipment on September 30, 2024 and sell it today you would earn a total of  112,941  from holding Action Construction Equipment or generate 356.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Action Construction Equipment  vs.  Kewal Kiran Clothing

Action Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Action Construction Equipment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Action Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Action Construction and Kewal Kiran

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

The idea behind Action Construction Equipment and Kewal Kiran Clothing 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.