Correlation Between Honeywell Automation and Kilitch Drugs

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

By analyzing existing cross correlation between Honeywell Automation India and Kilitch Drugs Limited, you can compare the effects of market volatilities on Honeywell Automation and Kilitch Drugs 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 Honeywell Automation with a short position of Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell Automation and Kilitch Drugs.

Diversification Opportunities for Honeywell Automation and Kilitch Drugs

0.32

Correlation Coefficient

Honeywell Automation  Kilitch Drugs

Weak diversification

The 3 months correlation between Honeywell and Kilitch is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs Limited and Honeywell Automation 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 Honeywell Automation India are associated (or correlated) with Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of Honeywell Automation i.e., Honeywell Automation and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Honeywell Automation and Kilitch Drugs

Assuming the 90 days trading horizon Honeywell Automation India is expected to under-perform the Kilitch Drugs. In addition to that, Honeywell Automation is 1.4 times more volatile than Kilitch Drugs Limited. It trades about -0.38 of its total potential returns per unit of risk. Kilitch Drugs Limited is currently generating about -0.34 per unit of volatility. If you would invest  34,665  in Kilitch Drugs Limited on November 20, 2024 and sell it today you would lose (3,795) from holding Kilitch Drugs Limited or give up 10.95% of portfolio value over 90 days.

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

Honeywell Automation India  vs.  Kilitch Drugs Limited

Honeywell Automation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honeywell Automation India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kilitch Drugs Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Honeywell Automation and Kilitch Drugs

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

The idea behind Honeywell Automation India and Kilitch Drugs 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.