Correlation Between Kaynes Technology and Vibhor Steel

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

Diversification Opportunities for Kaynes Technology and Vibhor Steel

-0.56

Correlation Coefficient

Kaynes Technology  Vibhor Steel

Excellent diversification

The 3 months correlation between Kaynes and Vibhor is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Vibhor Steel Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vibhor Steel Tubes 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 Vibhor Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vibhor Steel Tubes has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Vibhor Steel go up and down completely randomly.

Pair Corralation between Kaynes Technology and Vibhor Steel

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 0.84 times more return on investment than Vibhor Steel. However, Kaynes Technology India is 1.19 times less risky than Vibhor Steel. It trades about 0.48 of its potential returns per unit of risk. Vibhor Steel Tubes is currently generating about -0.13 per unit of risk. If you would invest  622,550  in Kaynes Technology India on October 4, 2024 and sell it today you would earn a total of  119,180  from holding Kaynes Technology India or generate 19.14% return on investment over 90 days.

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

Kaynes Technology India  vs.  Vibhor Steel Tubes

Kaynes Technology India

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaynes Technology India are ranked lower than 19 (%) 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.

Vibhor Steel Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhor Steel Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Kaynes Technology and Vibhor Steel

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

The idea behind Kaynes Technology India and Vibhor Steel Tubes 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.