Correlation Between IdeaForge Technology and KNR Constructions

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

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

Diversification Opportunities for IdeaForge Technology and KNR Constructions

0.3

Correlation Coefficient

IdeaForge Technology  KNR Constructions

Weak diversification

The 3 months correlation between IdeaForge and KNR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ideaForge Technology Limited and KNR Constructions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNR Constructions and IdeaForge Technology 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 ideaForge Technology Limited are associated (or correlated) with KNR Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNR Constructions has no effect on the direction of IdeaForge Technology i.e., IdeaForge Technology and KNR Constructions go up and down completely randomly.

Pair Corralation between IdeaForge Technology and KNR Constructions

Assuming the 90 days trading horizon ideaForge Technology Limited is expected to under-perform the KNR Constructions. In addition to that, IdeaForge Technology is 1.08 times more volatile than KNR Constructions Limited. It trades about -0.01 of its total potential returns per unit of risk. KNR Constructions Limited is currently generating about 0.07 per unit of volatility. If you would invest  31,755  in KNR Constructions Limited on October 8, 2024 and sell it today you would earn a total of  2,880  from holding KNR Constructions Limited or generate 9.07% return on investment over 90 days.

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

ideaForge Technology Limited  vs.  KNR Constructions Limited

ideaForge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ideaForge Technology Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IdeaForge Technology is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

KNR Constructions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KNR Constructions Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, KNR Constructions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IdeaForge Technology and KNR Constructions

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

The idea behind ideaForge Technology Limited and KNR Constructions 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.