Correlation Between KEI Industries and Cholamandalam Investment

Can any of the company-specific risk be diversified away by investing in both KEI Industries and Cholamandalam Investment 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 KEI Industries and Cholamandalam Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KEI Industries Limited and Cholamandalam Investment and, you can compare the effects of market volatilities on KEI Industries and Cholamandalam Investment 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 KEI Industries with a short position of Cholamandalam Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEI Industries and Cholamandalam Investment.

Diversification Opportunities for KEI Industries and Cholamandalam Investment

-0.89

Correlation Coefficient

KEI Industries  Cholamandalam Investment

Pay attention - limited upside

The 3 months correlation between KEI and Cholamandalam is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding KEI Industries Limited and Cholamandalam Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Investment and KEI Industries 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 KEI Industries Limited are associated (or correlated) with Cholamandalam Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Investment has no effect on the direction of KEI Industries i.e., KEI Industries and Cholamandalam Investment go up and down completely randomly.

Pair Corralation between KEI Industries and Cholamandalam Investment

Assuming the 90 days trading horizon KEI Industries Limited is expected to under-perform the Cholamandalam Investment. In addition to that, KEI Industries is 1.76 times more volatile than Cholamandalam Investment and. It trades about -0.14 of its total potential returns per unit of risk. Cholamandalam Investment and is currently generating about 0.19 per unit of volatility. If you would invest  118,603  in Cholamandalam Investment and on December 26, 2024 and sell it today you would earn a total of  34,302  from holding Cholamandalam Investment and or generate 28.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

KEI Industries Limited  vs.  Cholamandalam Investment and

KEI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cholamandalam Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cholamandalam Investment and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Cholamandalam Investment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEI Industries and Cholamandalam Investment

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

The idea behind KEI Industries Limited and Cholamandalam Investment and 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.

Check out your portfolio center.

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.