Correlation Between Kaynes Technology and Garware Hi-Tech

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

Diversification Opportunities for Kaynes Technology and Garware Hi-Tech

0.8

Correlation Coefficient

Kaynes Technology  Garware Hi-Tech

Very poor diversification

The 3 months correlation between Kaynes and Garware is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech 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 Garware Hi-Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Garware Hi-Tech go up and down completely randomly.

Pair Corralation between Kaynes Technology and Garware Hi-Tech

Assuming the 90 days trading horizon Kaynes Technology India is expected to under-perform the Garware Hi-Tech. But the stock apears to be less risky and, when comparing its historical volatility, Kaynes Technology India is 1.21 times less risky than Garware Hi-Tech. The stock trades about -0.15 of its potential returns per unit of risk. The Garware Hi Tech Films is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  501,895  in Garware Hi Tech Films on December 28, 2024 and sell it today you would lose (108,750) from holding Garware Hi Tech Films or give up 21.67% of portfolio value over 90 days.

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

Kaynes Technology India  vs.  Garware Hi Tech Films

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Garware Hi Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garware Hi Tech Films has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kaynes Technology and Garware Hi-Tech

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

The idea behind Kaynes Technology India and Garware Hi Tech Films 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.