Correlation Between Industrial Investment and Keynote Financial

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

By analyzing existing cross correlation between Industrial Investment Trust and Keynote Financial Services, you can compare the effects of market volatilities on Industrial Investment and Keynote Financial 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 Industrial Investment with a short position of Keynote Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Keynote Financial.

Diversification Opportunities for Industrial Investment and Keynote Financial

-0.51

Correlation Coefficient

Industrial Investment  Keynote Financial

Excellent diversification

The 3 months correlation between Industrial and Keynote is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Keynote Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keynote Financial and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Keynote Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keynote Financial has no effect on the direction of Industrial Investment i.e., Industrial Investment and Keynote Financial go up and down completely randomly.

Pair Corralation between Industrial Investment and Keynote Financial

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.58 times more return on investment than Keynote Financial. However, Industrial Investment Trust is 1.71 times less risky than Keynote Financial. It trades about 0.25 of its potential returns per unit of risk. Keynote Financial Services is currently generating about 0.07 per unit of risk. If you would invest  15,515  in Industrial Investment Trust on September 24, 2024 and sell it today you would earn a total of  22,550  from holding Industrial Investment Trust or generate 145.34% return on investment over 90 days.

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

Industrial Investment Trust  vs.  Keynote Financial Services

Industrial Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Keynote Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keynote Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Keynote Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Industrial Investment and Keynote Financial

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

The idea behind Industrial Investment Trust and Keynote Financial Services 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.