Correlation Between COSMO FIRST and Kaynes Technology

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

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

Diversification Opportunities for COSMO FIRST and Kaynes Technology

0.95

Correlation Coefficient

COSMO FIRST  Kaynes Technology

Almost no diversification

The 3 months correlation between COSMO and Kaynes is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED 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 COSMO FIRST 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 COSMO FIRST LIMITED 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 COSMO FIRST i.e., COSMO FIRST and Kaynes Technology go up and down completely randomly.

Pair Corralation between COSMO FIRST and Kaynes Technology

Assuming the 90 days trading horizon COSMO FIRST is expected to generate 8.18 times less return on investment than Kaynes Technology. But when comparing it to its historical volatility, COSMO FIRST LIMITED is 1.18 times less risky than Kaynes Technology. It trades about 0.02 of its potential returns per unit of risk. Kaynes Technology India is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  95,140  in Kaynes Technology India on December 5, 2024 and sell it today you would earn a total of  309,575  from holding Kaynes Technology India or generate 325.39% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Kaynes Technology India

COSMO FIRST LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSMO FIRST LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology India 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with COSMO FIRST and Kaynes Technology

The main advantage of trading using opposite COSMO FIRST and Kaynes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSMO FIRST 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 COSMO FIRST LIMITED 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.