Correlation Between G Tec and KIOCL

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

By analyzing existing cross correlation between G Tec Jainx Education and KIOCL Limited, you can compare the effects of market volatilities on G Tec and KIOCL 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 G Tec with a short position of KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and KIOCL.

Diversification Opportunities for G Tec and KIOCL

-0.07

Correlation Coefficient

G Tec  KIOCL

Good diversification

The 3 months correlation between GTECJAINX and KIOCL is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and G Tec 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 G Tec Jainx Education are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of G Tec i.e., G Tec and KIOCL go up and down completely randomly.

Pair Corralation between G Tec and KIOCL

Assuming the 90 days trading horizon G Tec is expected to generate 1.45 times less return on investment than KIOCL. But when comparing it to its historical volatility, G Tec Jainx Education is 1.37 times less risky than KIOCL. It trades about 0.07 of its potential returns per unit of risk. KIOCL Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  37,700  in KIOCL Limited on October 6, 2024 and sell it today you would earn a total of  2,060  from holding KIOCL Limited or generate 5.46% return on investment over 90 days.

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

G Tec Jainx Education  vs.  KIOCL Limited

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

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

KIOCL Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Tec and KIOCL

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

The idea behind G Tec Jainx Education and KIOCL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.