Correlation Between Coffee Day and Kaynes Technology

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

By analyzing existing cross correlation between Coffee Day Enterprises and Kaynes Technology India, you can compare the effects of market volatilities on Coffee Day and Kaynes Technology 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 Coffee Day with a short position of Kaynes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Day and Kaynes Technology.

Diversification Opportunities for Coffee Day and Kaynes Technology

-0.85

Correlation Coefficient

Coffee Day  Kaynes Technology

Pay attention - limited upside

The 3 months correlation between Coffee and Kaynes is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and Kaynes Technology India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaynes Technology India and Coffee Day 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 Coffee Day Enterprises are associated (or correlated) with Kaynes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaynes Technology India has no effect on the direction of Coffee Day i.e., Coffee Day and Kaynes Technology go up and down completely randomly.

Pair Corralation between Coffee Day and Kaynes Technology

Assuming the 90 days trading horizon Coffee Day Enterprises is expected to under-perform the Kaynes Technology. In addition to that, Coffee Day is 1.23 times more volatile than Kaynes Technology India. It trades about -0.08 of its total potential returns per unit of risk. Kaynes Technology India is currently generating about 0.15 per unit of volatility. If you would invest  559,030  in Kaynes Technology India on October 11, 2024 and sell it today you would earn a total of  138,035  from holding Kaynes Technology India or generate 24.69% return on investment over 90 days.

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

Coffee Day Enterprises  vs.  Kaynes Technology India

Coffee Day Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kaynes Technology India

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kaynes Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coffee Day and Kaynes Technology

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

The idea behind Coffee Day Enterprises and Kaynes Technology India 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.