Correlation Between Hi Tech and KEC International

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

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

Diversification Opportunities for Hi Tech and KEC International

0.0

Correlation Coefficient

Hi Tech  KEC International

Pay attention - limited upside

The 3 months correlation between HITECHGEAR and KEC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Hi Tech Gears and KEC International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEC International and Hi Tech 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 The Hi Tech Gears 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 Hi Tech i.e., Hi Tech and KEC International go up and down completely randomly.

Pair Corralation between Hi Tech and KEC International

If you would invest  75,495  in The Hi Tech Gears on October 24, 2024 and sell it today you would earn a total of  2,065  from holding The Hi Tech Gears or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Hi Tech Gears  vs.  KEC International Limited

Hi Tech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hi Tech Gears are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hi Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KEC International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEC International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, KEC International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hi Tech and KEC International

The main advantage of trading using opposite Hi Tech and KEC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech 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 The Hi Tech Gears 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.