Correlation Between Kaushalya Infrastructure and HMT

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

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

Diversification Opportunities for Kaushalya Infrastructure and HMT

-0.01

Correlation Coefficient

Kaushalya Infrastructure  HMT

Good diversification

The 3 months correlation between Kaushalya and HMT is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and HMT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMT Limited and Kaushalya Infrastructure 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 Kaushalya Infrastructure Development are associated (or correlated) with HMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMT Limited has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and HMT go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and HMT

Assuming the 90 days trading horizon Kaushalya Infrastructure Development is expected to generate 1.19 times more return on investment than HMT. However, Kaushalya Infrastructure is 1.19 times more volatile than HMT Limited. It trades about 0.06 of its potential returns per unit of risk. HMT Limited is currently generating about 0.06 per unit of risk. If you would invest  50,000  in Kaushalya Infrastructure Development on September 23, 2024 and sell it today you would earn a total of  41,760  from holding Kaushalya Infrastructure Development or generate 83.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.32%
Values	Daily Returns

Kaushalya Infrastructure Devel  vs.  HMT Limited

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

HMT Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kaushalya Infrastructure and HMT

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

The idea behind Kaushalya Infrastructure Development and HMT 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.