Correlation Between Kaushalya Infrastructure and Nippon Life

Can any of the company-specific risk be diversified away by investing in both Kaushalya Infrastructure and Nippon Life 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 Nippon Life 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 Nippon Life India, you can compare the effects of market volatilities on Kaushalya Infrastructure and Nippon Life 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 Nippon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaushalya Infrastructure and Nippon Life.

Diversification Opportunities for Kaushalya Infrastructure and Nippon Life

0.23

Correlation Coefficient

Kaushalya Infrastructure  Nippon Life

Modest diversification

The 3 months correlation between Kaushalya and Nippon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and Nippon Life India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Life India 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 Nippon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Life India has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and Nippon Life go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and Nippon Life

Assuming the 90 days trading horizon Kaushalya Infrastructure is expected to generate 1.78 times less return on investment than Nippon Life. In addition to that, Kaushalya Infrastructure is 1.17 times more volatile than Nippon Life India. It trades about 0.05 of its total potential returns per unit of risk. Nippon Life India is currently generating about 0.1 per unit of volatility. If you would invest  39,518  in Nippon Life India on September 23, 2024 and sell it today you would earn a total of  35,507  from holding Nippon Life India or generate 89.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.96%
Values	Daily Returns

Kaushalya Infrastructure Devel  vs.  Nippon Life India

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.

Nippon Life India

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Life India are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Nippon Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kaushalya Infrastructure and Nippon Life

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

The idea behind Kaushalya Infrastructure Development and Nippon Life India 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.