Correlation Between Industrial Investment and Kalpataru Projects

Can any of the company-specific risk be diversified away by investing in both Industrial Investment and Kalpataru Projects 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 Kalpataru Projects 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 Kalpataru Projects International, you can compare the effects of market volatilities on Industrial Investment and Kalpataru Projects 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 Kalpataru Projects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Kalpataru Projects.

Diversification Opportunities for Industrial Investment and Kalpataru Projects

-0.63

Correlation Coefficient

Industrial Investment  Kalpataru Projects

Excellent diversification

The 3 months correlation between Industrial and Kalpataru is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects 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 Kalpataru Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalpataru Projects has no effect on the direction of Industrial Investment i.e., Industrial Investment and Kalpataru Projects go up and down completely randomly.

Pair Corralation between Industrial Investment and Kalpataru Projects

Assuming the 90 days trading horizon Industrial Investment is expected to generate 3.39 times less return on investment than Kalpataru Projects. In addition to that, Industrial Investment is 1.27 times more volatile than Kalpataru Projects International. It trades about 0.05 of its total potential returns per unit of risk. Kalpataru Projects International is currently generating about 0.2 per unit of volatility. If you would invest  119,685  in Kalpataru Projects International on September 19, 2024 and sell it today you would earn a total of  11,750  from holding Kalpataru Projects International or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Industrial Investment Trust  vs.  Kalpataru Projects Internation

Industrial Investment

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Industrial Investment and Kalpataru Projects

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

The idea behind Industrial Investment Trust and Kalpataru Projects International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.