Correlation Between Kaynes Technology and Sportking India

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

Diversification Opportunities for Kaynes Technology and Sportking India

0.24

Correlation Coefficient

Kaynes Technology  Sportking India

Modest diversification

The 3 months correlation between Kaynes and Sportking is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India 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 Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Sportking India go up and down completely randomly.

Pair Corralation between Kaynes Technology and Sportking India

Assuming the 90 days trading horizon Kaynes Technology is expected to generate 14.85 times less return on investment than Sportking India. But when comparing it to its historical volatility, Kaynes Technology India is 27.45 times less risky than Sportking India. It trades about 0.15 of its potential returns per unit of risk. Sportking India Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,305  in Sportking India Limited on October 3, 2024 and sell it today you would earn a total of  2,108  from holding Sportking India Limited or generate 25.38% return on investment over 90 days.

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

Kaynes Technology India  vs.  Sportking India Limited

Kaynes Technology India

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kaynes Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Sportking India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kaynes Technology and Sportking India

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

The idea behind Kaynes Technology India and Sportking India 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.