Correlation Between Arvind Fashions and Kalyani Investment

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

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

Diversification Opportunities for Arvind Fashions and Kalyani Investment

0.41

Correlation Coefficient

Arvind Fashions  Kalyani Investment

Very weak diversification

The 3 months correlation between Arvind and Kalyani is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arvind Fashions Limited and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment and Arvind Fashions 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 Arvind Fashions Limited are associated (or correlated) with Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of Arvind Fashions i.e., Arvind Fashions and Kalyani Investment go up and down completely randomly.

Pair Corralation between Arvind Fashions and Kalyani Investment

Assuming the 90 days trading horizon Arvind Fashions Limited is expected to generate 1.07 times more return on investment than Kalyani Investment. However, Arvind Fashions is 1.07 times more volatile than Kalyani Investment. It trades about -0.02 of its potential returns per unit of risk. Kalyani Investment is currently generating about -0.55 per unit of risk. If you would invest  53,215  in Arvind Fashions Limited on October 11, 2024 and sell it today you would lose (420.00) from holding Arvind Fashions Limited or give up 0.79% of portfolio value over 90 days.

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

Arvind Fashions Limited  vs.  Kalyani Investment

Arvind Fashions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arvind Fashions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kalyani Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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 Arvind Fashions and Kalyani Investment

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

The idea behind Arvind Fashions Limited and Kalyani Investment 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.