Correlation Between Insteel Industries and Khiron Life

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

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

Diversification Opportunities for Insteel Industries and Khiron Life

0.0

Correlation Coefficient

Insteel Industries  Khiron Life

Pay attention - limited upside

The 3 months correlation between Insteel and Khiron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Khiron Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khiron Life Sciences and Insteel Industries 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 Insteel Industries are associated (or correlated) with Khiron Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khiron Life Sciences has no effect on the direction of Insteel Industries i.e., Insteel Industries and Khiron Life go up and down completely randomly.

Pair Corralation between Insteel Industries and Khiron Life

Assuming the 90 days horizon Insteel Industries is expected to generate 0.48 times more return on investment than Khiron Life. However, Insteel Industries is 2.1 times less risky than Khiron Life. It trades about 0.03 of its potential returns per unit of risk. Khiron Life Sciences is currently generating about 0.0 per unit of risk. If you would invest  2,259  in Insteel Industries on September 3, 2024 and sell it today you would earn a total of  581.00  from holding Insteel Industries or generate 25.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Insteel Industries  vs.  Khiron Life Sciences

Insteel Industries

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insteel Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Khiron Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Insteel Industries and Khiron Life

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

The idea behind Insteel Industries and Khiron Life Sciences 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.