Correlation Between KEI Industries and Zodiac Clothing

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

Diversification Opportunities for KEI Industries and Zodiac Clothing

0.75

Correlation Coefficient

KEI Industries  Zodiac Clothing

Poor diversification

The 3 months correlation between KEI and Zodiac is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KEI Industries Limited and Zodiac Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Clothing 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 Zodiac Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Clothing has no effect on the direction of KEI Industries i.e., KEI Industries and Zodiac Clothing go up and down completely randomly.

Pair Corralation between KEI Industries and Zodiac Clothing

Assuming the 90 days trading horizon KEI Industries Limited is expected to generate 0.85 times more return on investment than Zodiac Clothing. However, KEI Industries Limited is 1.18 times less risky than Zodiac Clothing. It trades about 0.09 of its potential returns per unit of risk. Zodiac Clothing is currently generating about 0.03 per unit of risk. If you would invest  160,389  in KEI Industries Limited on October 21, 2024 and sell it today you would earn a total of  250,081  from holding KEI Industries Limited or generate 155.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

KEI Industries Limited  vs.  Zodiac Clothing

KEI Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KEI Industries Limited are ranked lower than 1 (%) 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.

Zodiac Clothing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Zodiac Clothing is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with KEI Industries and Zodiac Clothing

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

The idea behind KEI Industries Limited and Zodiac Clothing 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.