Correlation Between Kaynes Technology and SIL Investments

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

Diversification Opportunities for Kaynes Technology and SIL Investments

0.48

Correlation Coefficient

Kaynes Technology  SIL Investments

Very weak diversification

The 3 months correlation between Kaynes and SIL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and SIL Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIL Investments 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 SIL Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIL Investments has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and SIL Investments go up and down completely randomly.

Pair Corralation between Kaynes Technology and SIL Investments

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 0.61 times more return on investment than SIL Investments. However, Kaynes Technology India is 1.64 times less risky than SIL Investments. It trades about 0.17 of its potential returns per unit of risk. SIL Investments Limited is currently generating about 0.09 per unit of risk. If you would invest  547,935  in Kaynes Technology India on September 20, 2024 and sell it today you would earn a total of  162,200  from holding Kaynes Technology India or generate 29.6% 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.  SIL Investments Limited

Kaynes Technology India

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kaynes Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

SIL Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaynes Technology and SIL Investments

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

The idea behind Kaynes Technology India and SIL Investments 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 Commodity Directory module to find actively traded commodities issued by global exchanges.