Correlation Between Kaynes Technology and NMDC

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

Diversification Opportunities for Kaynes Technology and NMDC

0.5

Correlation Coefficient

Kaynes Technology  NMDC

Very weak diversification

The 3 months correlation between Kaynes and NMDC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and NMDC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMDC 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 NMDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMDC Limited has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and NMDC go up and down completely randomly.

Pair Corralation between Kaynes Technology and NMDC

Assuming the 90 days trading horizon Kaynes Technology India is expected to under-perform the NMDC. In addition to that, Kaynes Technology is 1.5 times more volatile than NMDC Limited. It trades about -0.12 of its total potential returns per unit of risk. NMDC Limited is currently generating about 0.02 per unit of volatility. If you would invest  6,909  in NMDC Limited on December 25, 2024 and sell it today you would earn a total of  44.00  from holding NMDC Limited or generate 0.64% return on investment over 90 days.

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

Kaynes Technology India  vs.  NMDC Limited

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.

NMDC Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMDC Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NMDC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kaynes Technology and NMDC

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

The idea behind Kaynes Technology India and NMDC 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 Transaction History module to view history of all your transactions and understand their impact on performance.