Correlation Between Kaynes Technology and Styrenix Performance

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

Diversification Opportunities for Kaynes Technology and Styrenix Performance

0.9

Correlation Coefficient

Kaynes Technology  Styrenix Performance

Almost no diversification

The 3 months correlation between Kaynes and Styrenix is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance 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 Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Styrenix Performance go up and down completely randomly.

Pair Corralation between Kaynes Technology and Styrenix Performance

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 1.21 times more return on investment than Styrenix Performance. However, Kaynes Technology is 1.21 times more volatile than Styrenix Performance Materials. It trades about 0.15 of its potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.12 per unit of risk. If you would invest  166,230  in Kaynes Technology India on October 3, 2024 and sell it today you would earn a total of  575,500  from holding Kaynes Technology India or generate 346.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.46%
Values	Daily Returns

Kaynes Technology India  vs.  Styrenix Performance Materials

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.

Styrenix Performance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaynes Technology and Styrenix Performance

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

The idea behind Kaynes Technology India and Styrenix Performance Materials 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.