Correlation Between Kaynes Technology and 20 Microns

Can any of the company-specific risk be diversified away by investing in both Kaynes Technology and 20 Microns 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 Kaynes Technology and 20 Microns into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaynes Technology India and 20 Microns Limited, you can compare the effects of market volatilities on Kaynes Technology and 20 Microns 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 Kaynes Technology with a short position of 20 Microns. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaynes Technology and 20 Microns.

Diversification Opportunities for Kaynes Technology and 20 Microns

-0.44

Correlation Coefficient

Kaynes Technology  20 Microns

Very good diversification

The 3 months correlation between Kaynes and 20MICRONS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and 20 Microns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 20 Microns Limited and Kaynes Technology 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 Kaynes Technology India are associated (or correlated) with 20 Microns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 20 Microns Limited has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and 20 Microns go up and down completely randomly.

Pair Corralation between Kaynes Technology and 20 Microns

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 0.97 times more return on investment than 20 Microns. However, Kaynes Technology India is 1.03 times less risky than 20 Microns. It trades about 0.16 of its potential returns per unit of risk. 20 Microns Limited is currently generating about 0.08 per unit of risk. If you would invest  80,050  in Kaynes Technology India on October 10, 2024 and sell it today you would earn a total of  617,015  from holding Kaynes Technology India or generate 770.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Kaynes Technology India  vs.  20 Microns Limited

Kaynes Technology India

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kaynes Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

20 Microns Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 20 Microns Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, 20 Microns is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kaynes Technology and 20 Microns

The main advantage of trading using opposite Kaynes Technology and 20 Microns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaynes Technology position performs unexpectedly, 20 Microns 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 20 Microns will offset losses from the drop in 20 Microns' long position.

The idea behind Kaynes Technology India and 20 Microns 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.