Correlation Between HMT and Kaushalya Infrastructure

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

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

Diversification Opportunities for HMT and Kaushalya Infrastructure

0.03

Correlation Coefficient

HMT  Kaushalya Infrastructure

Significant diversification

The 3 months correlation between HMT and Kaushalya is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HMT Limited and Kaushalya Infrastructure Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaushalya Infrastructure and HMT 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 HMT Limited are associated (or correlated) with Kaushalya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaushalya Infrastructure has no effect on the direction of HMT i.e., HMT and Kaushalya Infrastructure go up and down completely randomly.

Pair Corralation between HMT and Kaushalya Infrastructure

Assuming the 90 days trading horizon HMT Limited is expected to generate 1.29 times more return on investment than Kaushalya Infrastructure. However, HMT is 1.29 times more volatile than Kaushalya Infrastructure Development. It trades about 0.02 of its potential returns per unit of risk. Kaushalya Infrastructure Development is currently generating about -0.01 per unit of risk. If you would invest  6,427  in HMT Limited on September 25, 2024 and sell it today you would earn a total of  21.00  from holding HMT Limited or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

HMT Limited  vs.  Kaushalya Infrastructure Devel

HMT Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HMT and Kaushalya Infrastructure

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

The idea behind HMT Limited and Kaushalya Infrastructure Development 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.