Correlation Between Sri Havisha and KIOCL

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

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

Diversification Opportunities for Sri Havisha and KIOCL

-0.08

Correlation Coefficient

Sri Havisha  KIOCL

Good diversification

The 3 months correlation between Sri and KIOCL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sri Havisha Hospitality and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Sri Havisha 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 Sri Havisha Hospitality 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 Sri Havisha i.e., Sri Havisha and KIOCL go up and down completely randomly.

Pair Corralation between Sri Havisha and KIOCL

Assuming the 90 days trading horizon Sri Havisha Hospitality is expected to generate 1.15 times more return on investment than KIOCL. However, Sri Havisha is 1.15 times more volatile than KIOCL Limited. It trades about 0.0 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.06 per unit of risk. If you would invest  244.00  in Sri Havisha Hospitality on September 29, 2024 and sell it today you would lose (2.00) from holding Sri Havisha Hospitality or give up 0.82% of portfolio value over 90 days.

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

Sri Havisha Hospitality  vs.  KIOCL Limited

Sri Havisha Hospitality

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sri Havisha Hospitality are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Sri Havisha sustained solid returns over the last few months and may actually be approaching a breakup point.

KIOCL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, KIOCL is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sri Havisha and KIOCL

The main advantage of trading using opposite Sri Havisha and KIOCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Havisha 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 Sri Havisha Hospitality 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.