Correlation Between Ankit Metal and KIOCL

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

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

Diversification Opportunities for Ankit Metal and KIOCL

-0.18

Correlation Coefficient

Ankit Metal  KIOCL

Good diversification

The 3 months correlation between Ankit and KIOCL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Ankit Metal 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 Ankit Metal Power 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 Ankit Metal i.e., Ankit Metal and KIOCL go up and down completely randomly.

Pair Corralation between Ankit Metal and KIOCL

Assuming the 90 days trading horizon Ankit Metal Power is expected to generate 0.87 times more return on investment than KIOCL. However, Ankit Metal Power is 1.15 times less risky than KIOCL. It trades about 0.04 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.01 per unit of risk. If you would invest  361.00  in Ankit Metal Power on September 15, 2024 and sell it today you would earn a total of  19.00  from holding Ankit Metal Power or generate 5.26% return on investment over 90 days.

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

Ankit Metal Power  vs.  KIOCL Limited

Ankit Metal Power

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ankit Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KIOCL Limited

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, KIOCL is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ankit Metal and KIOCL

The main advantage of trading using opposite Ankit Metal and KIOCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ankit Metal 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 Ankit Metal Power 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.