Correlation Between G Tec and KNR Constructions

Can any of the company-specific risk be diversified away by investing in both G Tec and KNR Constructions 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 KNR Constructions 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 KNR Constructions Limited, you can compare the effects of market volatilities on G Tec and KNR Constructions 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 KNR Constructions. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and KNR Constructions.

Diversification Opportunities for G Tec and KNR Constructions

0.65

Correlation Coefficient

G Tec  KNR Constructions

Poor diversification

The 3 months correlation between GTECJAINX and KNR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and KNR Constructions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNR Constructions 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 KNR Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNR Constructions has no effect on the direction of G Tec i.e., G Tec and KNR Constructions go up and down completely randomly.

Pair Corralation between G Tec and KNR Constructions

Assuming the 90 days trading horizon G Tec Jainx Education is expected to generate 1.18 times more return on investment than KNR Constructions. However, G Tec is 1.18 times more volatile than KNR Constructions Limited. It trades about -0.06 of its potential returns per unit of risk. KNR Constructions Limited is currently generating about -0.26 per unit of risk. If you would invest  3,420  in G Tec Jainx Education on November 30, 2024 and sell it today you would lose (393.00) from holding G Tec Jainx Education or give up 11.49% of portfolio value over 90 days.

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

G Tec Jainx Education  vs.  KNR Constructions Limited

G Tec Jainx

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

KNR Constructions

Risk-Adjusted Performance

Very Weak

Over the last 90 days KNR Constructions Limited 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 fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with G Tec and KNR Constructions

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

The idea behind G Tec Jainx Education and KNR Constructions 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.