Correlation Between Kaynes Technology and Agarwal Industrial

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

Diversification Opportunities for Kaynes Technology and Agarwal Industrial

0.88

Correlation Coefficient

Kaynes Technology  Agarwal Industrial

Very poor diversification

The 3 months correlation between Kaynes and Agarwal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial 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 Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Kaynes Technology and Agarwal Industrial

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 1.1 times more return on investment than Agarwal Industrial. However, Kaynes Technology is 1.1 times more volatile than Agarwal Industrial. It trades about 0.14 of its potential returns per unit of risk. Agarwal Industrial is currently generating about 0.06 per unit of risk. If you would invest  82,915  in Kaynes Technology India on October 25, 2024 and sell it today you would earn a total of  452,160  from holding Kaynes Technology India or generate 545.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

Kaynes Technology India  vs.  Agarwal Industrial

Kaynes Technology India

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kaynes Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agarwal Industrial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Agarwal Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaynes Technology and Agarwal Industrial

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

The idea behind Kaynes Technology India and Agarwal Industrial 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.