Correlation Between Kaynes Technology and Sanginita Chemicals

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

Diversification Opportunities for Kaynes Technology and Sanginita Chemicals

-0.1

Correlation Coefficient

Kaynes Technology  Sanginita Chemicals

Good diversification

The 3 months correlation between Kaynes and Sanginita is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals 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 Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between Kaynes Technology and Sanginita Chemicals

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 0.85 times more return on investment than Sanginita Chemicals. However, Kaynes Technology India is 1.17 times less risky than Sanginita Chemicals. It trades about 0.15 of its potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.01 per unit of risk. If you would invest  81,435  in Kaynes Technology India on October 24, 2024 and sell it today you would earn a total of  516,350  from holding Kaynes Technology India or generate 634.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Kaynes Technology India  vs.  Sanginita Chemicals Limited

Kaynes Technology India

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kaynes Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kaynes Technology and Sanginita Chemicals

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

The idea behind Kaynes Technology India and Sanginita Chemicals 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.