Correlation Between Hindustan Copper and KEC International

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

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

Diversification Opportunities for Hindustan Copper and KEC International

0.02

Correlation Coefficient

Hindustan Copper  KEC International

Significant diversification

The 3 months correlation between Hindustan and KEC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Copper Limited and KEC International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEC International and Hindustan Copper 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 Hindustan Copper Limited are associated (or correlated) with KEC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEC International has no effect on the direction of Hindustan Copper i.e., Hindustan Copper and KEC International go up and down completely randomly.

Pair Corralation between Hindustan Copper and KEC International

Assuming the 90 days trading horizon Hindustan Copper Limited is expected to generate 1.23 times more return on investment than KEC International. However, Hindustan Copper is 1.23 times more volatile than KEC International Limited. It trades about 0.07 of its potential returns per unit of risk. KEC International Limited is currently generating about 0.07 per unit of risk. If you would invest  11,557  in Hindustan Copper Limited on October 24, 2024 and sell it today you would earn a total of  12,816  from holding Hindustan Copper Limited or generate 110.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Hindustan Copper Limited  vs.  KEC International Limited

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

KEC International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KEC International Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, KEC International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hindustan Copper and KEC International

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

The idea behind Hindustan Copper Limited and KEC International 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 Global Correlations module to find global opportunities by holding instruments from different markets.