Correlation Between Cholamandalam Investment and KEI Industries

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

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

Diversification Opportunities for Cholamandalam Investment and KEI Industries

-0.89

Correlation Coefficient

Cholamandalam Investment  KEI Industries

Pay attention - limited upside

The 3 months correlation between Cholamandalam and KEI is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cholamandalam Investment and and KEI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEI Industries and Cholamandalam 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 Cholamandalam Investment and are associated (or correlated) with KEI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEI Industries has no effect on the direction of Cholamandalam Investment i.e., Cholamandalam Investment and KEI Industries go up and down completely randomly.

Pair Corralation between Cholamandalam Investment and KEI Industries

Assuming the 90 days trading horizon Cholamandalam Investment and is expected to generate 0.57 times more return on investment than KEI Industries. However, Cholamandalam Investment and is 1.76 times less risky than KEI Industries. It trades about 0.19 of its potential returns per unit of risk. KEI Industries Limited is currently generating about -0.14 per unit of risk. If you would invest  118,603  in Cholamandalam Investment and on December 26, 2024 and sell it today you would earn a total of  34,302  from holding Cholamandalam Investment and or generate 28.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Cholamandalam Investment and  vs.  KEI Industries Limited

Cholamandalam Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cholamandalam Investment and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Cholamandalam Investment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KEI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cholamandalam Investment and KEI Industries

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

The idea behind Cholamandalam Investment and and KEI Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.