Correlation Between Kaushalya Infrastructure and Wipro

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

Diversification Opportunities for Kaushalya Infrastructure and Wipro

-0.14

Correlation Coefficient

Kaushalya Infrastructure  Wipro

Good diversification

The 3 months correlation between Kaushalya and Wipro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and Wipro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro 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 Wipro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and Wipro go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and Wipro

Assuming the 90 days trading horizon Kaushalya Infrastructure is expected to generate 1.14 times less return on investment than Wipro. In addition to that, Kaushalya Infrastructure is 1.37 times more volatile than Wipro Limited. It trades about 0.06 of its total potential returns per unit of risk. Wipro Limited is currently generating about 0.09 per unit of volatility. If you would invest  53,500  in Wipro Limited on September 3, 2024 and sell it today you would earn a total of  4,955  from holding Wipro Limited or generate 9.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kaushalya Infrastructure Devel  vs.  Wipro Limited

Kaushalya Infrastructure

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaushalya Infrastructure Development are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Kaushalya Infrastructure may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wipro Limited

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wipro Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Wipro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kaushalya Infrastructure and Wipro

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

The idea behind Kaushalya Infrastructure Development and Wipro 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 Stocks Directory module to find actively traded stocks across global markets.