Correlation Between AUTHUM INVESTMENT and KIOCL

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

By analyzing existing cross correlation between AUTHUM INVESTMENT INFRASTRUCTU and KIOCL Limited, you can compare the effects of market volatilities on AUTHUM INVESTMENT and KIOCL 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 AUTHUM INVESTMENT with a short position of KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTHUM INVESTMENT and KIOCL.

Diversification Opportunities for AUTHUM INVESTMENT and KIOCL

0.71

Correlation Coefficient

AUTHUM INVESTMENT  KIOCL

Poor diversification

The 3 months correlation between AUTHUM and KIOCL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AUTHUM INVESTMENT INFRASTRUCTU and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and AUTHUM INVESTMENT 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 AUTHUM INVESTMENT INFRASTRUCTU are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of AUTHUM INVESTMENT i.e., AUTHUM INVESTMENT and KIOCL go up and down completely randomly.

Pair Corralation between AUTHUM INVESTMENT and KIOCL

Assuming the 90 days trading horizon AUTHUM INVESTMENT INFRASTRUCTU is expected to generate 1.27 times more return on investment than KIOCL. However, AUTHUM INVESTMENT is 1.27 times more volatile than KIOCL Limited. It trades about -0.08 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.57 per unit of risk. If you would invest  169,475  in AUTHUM INVESTMENT INFRASTRUCTU on December 4, 2024 and sell it today you would lose (11,840) from holding AUTHUM INVESTMENT INFRASTRUCTU or give up 6.99% of portfolio value over 90 days.

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

AUTHUM INVESTMENT INFRASTRUCTU  vs.  KIOCL Limited

AUTHUM INVESTMENT

Risk-Adjusted Performance

Very Weak

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

KIOCL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AUTHUM INVESTMENT and KIOCL

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

The idea behind AUTHUM INVESTMENT INFRASTRUCTU and KIOCL Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.