Correlation Between Hisar Metal and Kalyani Investment

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

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

Diversification Opportunities for Hisar Metal and Kalyani Investment

-0.5

Correlation Coefficient

Hisar Metal  Kalyani Investment

Very good diversification

The 3 months correlation between Hisar and Kalyani is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment and Hisar 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 Hisar Metal Industries are associated (or correlated) with Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of Hisar Metal i.e., Hisar Metal and Kalyani Investment go up and down completely randomly.

Pair Corralation between Hisar Metal and Kalyani Investment

Assuming the 90 days trading horizon Hisar Metal Industries is expected to generate 1.8 times more return on investment than Kalyani Investment. However, Hisar Metal is 1.8 times more volatile than Kalyani Investment. It trades about 0.17 of its potential returns per unit of risk. Kalyani Investment is currently generating about -0.32 per unit of risk. If you would invest  18,877  in Hisar Metal Industries on October 10, 2024 and sell it today you would earn a total of  2,173  from holding Hisar Metal Industries or generate 11.51% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Kalyani Investment

Hisar Metal Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Hisar Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kalyani Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalyani Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hisar Metal and Kalyani Investment

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

The idea behind Hisar Metal Industries and Kalyani Investment 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.