Correlation Between Indian Card and Kewal Kiran

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

By analyzing existing cross correlation between Indian Card Clothing and Kewal Kiran Clothing, you can compare the effects of market volatilities on Indian Card and Kewal Kiran 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 Card with a short position of Kewal Kiran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Card and Kewal Kiran.

Diversification Opportunities for Indian Card and Kewal Kiran

0.04

Correlation Coefficient

Indian Card  Kewal Kiran

Significant diversification

The 3 months correlation between Indian and Kewal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Indian Card Clothing and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and Indian Card 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 Card Clothing are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Indian Card i.e., Indian Card and Kewal Kiran go up and down completely randomly.

Pair Corralation between Indian Card and Kewal Kiran

Assuming the 90 days trading horizon Indian Card Clothing is expected to generate 1.44 times more return on investment than Kewal Kiran. However, Indian Card is 1.44 times more volatile than Kewal Kiran Clothing. It trades about 0.07 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.05 per unit of risk. If you would invest  21,020  in Indian Card Clothing on September 19, 2024 and sell it today you would earn a total of  19,350  from holding Indian Card Clothing or generate 92.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.57%
Values	Daily Returns

Indian Card Clothing  vs.  Kewal Kiran Clothing

Indian Card Clothing

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Card Clothing are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Indian Card exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Indian Card and Kewal Kiran

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

The idea behind Indian Card Clothing and Kewal Kiran Clothing 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.