Correlation Between Generic Engineering and Karur Vysya

Can any of the company-specific risk be diversified away by investing in both Generic Engineering and Karur Vysya 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 Generic Engineering and Karur Vysya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generic Engineering Construction and Karur Vysya Bank, you can compare the effects of market volatilities on Generic Engineering and Karur Vysya 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 Generic Engineering with a short position of Karur Vysya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Karur Vysya.

Diversification Opportunities for Generic Engineering and Karur Vysya

0.56

Correlation Coefficient

Generic Engineering  Karur Vysya

Very weak diversification

The 3 months correlation between Generic and Karur is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of Generic Engineering i.e., Generic Engineering and Karur Vysya go up and down completely randomly.

Pair Corralation between Generic Engineering and Karur Vysya

Assuming the 90 days trading horizon Generic Engineering Construction is expected to generate 1.58 times more return on investment than Karur Vysya. However, Generic Engineering is 1.58 times more volatile than Karur Vysya Bank. It trades about 0.04 of its potential returns per unit of risk. Karur Vysya Bank is currently generating about 0.04 per unit of risk. If you would invest  3,839  in Generic Engineering Construction on October 24, 2024 and sell it today you would earn a total of  192.00  from holding Generic Engineering Construction or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Generic Engineering Constructi  vs.  Karur Vysya Bank

Generic Engineering

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Engineering Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Generic Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Karur Vysya Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Karur Vysya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Generic Engineering and Karur Vysya

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

The idea behind Generic Engineering Construction and Karur Vysya Bank 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.