Correlation Between CSB Bank and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both CSB Bank and Kilitch Drugs 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 CSB Bank and Kilitch Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CSB Bank and Kilitch Drugs

0.04

Correlation Coefficient

CSB Bank  Kilitch Drugs

Significant diversification

The 3 months correlation between CSB and Kilitch is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CSB Bank Limited and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs Limited and CSB Bank 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 CSB Bank Limited are associated (or correlated) with Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of CSB Bank i.e., CSB Bank and Kilitch Drugs go up and down completely randomly.

Pair Corralation between CSB Bank and Kilitch Drugs

Assuming the 90 days trading horizon CSB Bank is expected to generate 5.58 times less return on investment than Kilitch Drugs. But when comparing it to its historical volatility, CSB Bank Limited is 1.39 times less risky than Kilitch Drugs. It trades about 0.02 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  30,450  in Kilitch Drugs Limited on October 26, 2024 and sell it today you would earn a total of  2,580  from holding Kilitch Drugs Limited or generate 8.47% return on investment over 90 days.

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

CSB Bank Limited  vs.  Kilitch Drugs Limited

CSB Bank Limited

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CSB Bank is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Kilitch Drugs Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Kilitch Drugs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CSB Bank and Kilitch Drugs

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

The idea behind CSB Bank Limited and Kilitch Drugs 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.