Correlation Between Country Club and Kalyani Steels

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

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

Diversification Opportunities for Country Club and Kalyani Steels

0.2

Correlation Coefficient

Country Club  Kalyani Steels

Modest diversification

The 3 months correlation between Country and Kalyani is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Country Club Hospitality and Kalyani Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Steels and Country Club 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 Country Club Hospitality are associated (or correlated) with Kalyani Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Steels has no effect on the direction of Country Club i.e., Country Club and Kalyani Steels go up and down completely randomly.

Pair Corralation between Country Club and Kalyani Steels

Assuming the 90 days trading horizon Country Club is expected to generate 1.11 times less return on investment than Kalyani Steels. In addition to that, Country Club is 1.3 times more volatile than Kalyani Steels Limited. It trades about 0.07 of its total potential returns per unit of risk. Kalyani Steels Limited is currently generating about 0.11 per unit of volatility. If you would invest  34,894  in Kalyani Steels Limited on September 20, 2024 and sell it today you would earn a total of  90,016  from holding Kalyani Steels Limited or generate 257.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Country Club Hospitality  vs.  Kalyani Steels Limited

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Kalyani Steels

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Country Club and Kalyani Steels

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

The idea behind Country Club Hospitality and Kalyani Steels 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.