Correlation Between Vodafone Idea and Kaynes Technology

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

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

Diversification Opportunities for Vodafone Idea and Kaynes Technology

-0.35

Correlation Coefficient

Vodafone Idea  Kaynes Technology

Very good diversification

The 3 months correlation between Vodafone and Kaynes is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Idea Limited and Kaynes Technology India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaynes Technology India and Vodafone Idea 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 Vodafone Idea Limited are associated (or correlated) with Kaynes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaynes Technology India has no effect on the direction of Vodafone Idea i.e., Vodafone Idea and Kaynes Technology go up and down completely randomly.

Pair Corralation between Vodafone Idea and Kaynes Technology

Assuming the 90 days trading horizon Vodafone Idea Limited is expected to generate 0.76 times more return on investment than Kaynes Technology. However, Vodafone Idea Limited is 1.32 times less risky than Kaynes Technology. It trades about -0.03 of its potential returns per unit of risk. Kaynes Technology India is currently generating about -0.17 per unit of risk. If you would invest  808.00  in Vodafone Idea Limited on December 5, 2024 and sell it today you would lose (65.00) from holding Vodafone Idea Limited or give up 8.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Vodafone Idea Limited  vs.  Kaynes Technology India

Vodafone Idea Limited

Risk-Adjusted Performance

Very Weak

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

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vodafone Idea and Kaynes Technology

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

The idea behind Vodafone Idea Limited and Kaynes Technology India 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.