Correlation Between Hilton Metal and Kalyani Steels

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

By analyzing existing cross correlation between Hilton Metal Forging and Kalyani Steels Limited, you can compare the effects of market volatilities on Hilton Metal and Kalyani Steels 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 Hilton Metal with a short position of Kalyani Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Kalyani Steels.

Diversification Opportunities for Hilton Metal and Kalyani Steels

0.82

Correlation Coefficient

Hilton Metal  Kalyani Steels

Very poor diversification

The 3 months correlation between Hilton and Kalyani is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Kalyani Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Steels and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Kalyani Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Steels has no effect on the direction of Hilton Metal i.e., Hilton Metal and Kalyani Steels go up and down completely randomly.

Pair Corralation between Hilton Metal and Kalyani Steels

Assuming the 90 days trading horizon Hilton Metal Forging is expected to generate 1.54 times more return on investment than Kalyani Steels. However, Hilton Metal is 1.54 times more volatile than Kalyani Steels Limited. It trades about -0.09 of its potential returns per unit of risk. Kalyani Steels Limited is currently generating about -0.2 per unit of risk. If you would invest  10,335  in Hilton Metal Forging on December 25, 2024 and sell it today you would lose (2,622) from holding Hilton Metal Forging or give up 25.37% of portfolio value over 90 days.

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

Hilton Metal Forging  vs.  Kalyani Steels Limited

Hilton Metal Forging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Metal Forging 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kalyani Steels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kalyani Steels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hilton Metal and Kalyani Steels

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

The idea behind Hilton Metal Forging and Kalyani Steels 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.