Correlation Between KEI Industries and Vaxtex Cotfab

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

Diversification Opportunities for KEI Industries and Vaxtex Cotfab

0.59

Correlation Coefficient

KEI Industries  Vaxtex Cotfab

Very weak diversification

The 3 months correlation between KEI and Vaxtex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KEI Industries Limited and Vaxtex Cotfab Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxtex Cotfab Limited 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 Vaxtex Cotfab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxtex Cotfab Limited has no effect on the direction of KEI Industries i.e., KEI Industries and Vaxtex Cotfab go up and down completely randomly.

Pair Corralation between KEI Industries and Vaxtex Cotfab

Assuming the 90 days trading horizon KEI Industries Limited is expected to generate 0.83 times more return on investment than Vaxtex Cotfab. However, KEI Industries Limited is 1.2 times less risky than Vaxtex Cotfab. It trades about 0.0 of its potential returns per unit of risk. Vaxtex Cotfab Limited is currently generating about -0.04 per unit of risk. If you would invest  460,290  in KEI Industries Limited on October 4, 2024 and sell it today you would lose (16,625) from holding KEI Industries Limited or give up 3.61% of portfolio value over 90 days.

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

KEI Industries Limited  vs.  Vaxtex Cotfab Limited

KEI Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KEI Industries Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, KEI Industries is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vaxtex Cotfab Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vaxtex Cotfab Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Vaxtex Cotfab exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEI Industries and Vaxtex Cotfab

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

The idea behind KEI Industries Limited and Vaxtex Cotfab 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.