Correlation Between Indian Metals and Kaushalya Infrastructure

Can any of the company-specific risk be diversified away by investing in both Indian Metals and Kaushalya Infrastructure 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 Indian Metals and Kaushalya Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indian Metals Ferro and Kaushalya Infrastructure Development, you can compare the effects of market volatilities on Indian Metals and Kaushalya Infrastructure 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 Indian Metals with a short position of Kaushalya Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and Kaushalya Infrastructure.

Diversification Opportunities for Indian Metals and Kaushalya Infrastructure

0.55

Correlation Coefficient

Indian Metals  Kaushalya Infrastructure

Very weak diversification

The 3 months correlation between Indian and Kaushalya is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Kaushalya Infrastructure Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaushalya Infrastructure and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with Kaushalya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaushalya Infrastructure has no effect on the direction of Indian Metals i.e., Indian Metals and Kaushalya Infrastructure go up and down completely randomly.

Pair Corralation between Indian Metals and Kaushalya Infrastructure

Assuming the 90 days trading horizon Indian Metals Ferro is expected to generate 0.99 times more return on investment than Kaushalya Infrastructure. However, Indian Metals Ferro is 1.01 times less risky than Kaushalya Infrastructure. It trades about 0.1 of its potential returns per unit of risk. Kaushalya Infrastructure Development is currently generating about 0.04 per unit of risk. If you would invest  38,475  in Indian Metals Ferro on September 26, 2024 and sell it today you would earn a total of  48,630  from holding Indian Metals Ferro or generate 126.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.41%
Values	Daily Returns

Indian Metals Ferro  vs.  Kaushalya Infrastructure Devel

Indian Metals Ferro

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Indian Metals and Kaushalya Infrastructure

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

The idea behind Indian Metals Ferro and Kaushalya Infrastructure Development 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.