Correlation Between Kaynes Technology and Thirumalai Chemicals

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

Diversification Opportunities for Kaynes Technology and Thirumalai Chemicals

0.34

Correlation Coefficient

Kaynes Technology  Thirumalai Chemicals

Weak diversification

The 3 months correlation between Kaynes and Thirumalai is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai 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 Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Thirumalai Chemicals go up and down completely randomly.

Pair Corralation between Kaynes Technology and Thirumalai Chemicals

Assuming the 90 days trading horizon Kaynes Technology India is expected to under-perform the Thirumalai Chemicals. In addition to that, Kaynes Technology is 1.49 times more volatile than Thirumalai Chemicals Limited. It trades about -0.23 of its total potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about -0.17 per unit of volatility. If you would invest  31,800  in Thirumalai Chemicals Limited on October 26, 2024 and sell it today you would lose (3,305) from holding Thirumalai Chemicals Limited or give up 10.39% of portfolio value over 90 days.

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

Kaynes Technology India  vs.  Thirumalai Chemicals Limited

Kaynes Technology India

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kaynes Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Thirumalai Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thirumalai Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Thirumalai Chemicals is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kaynes Technology and Thirumalai Chemicals

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

The idea behind Kaynes Technology India and Thirumalai 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.