Correlation Between Kalyani Investment and KIOCL

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

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

Diversification Opportunities for Kalyani Investment and KIOCL

-0.28

Correlation Coefficient

Kalyani Investment  KIOCL

Very good diversification

The 3 months correlation between Kalyani and KIOCL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Investment and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Kalyani Investment 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 Kalyani Investment are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Kalyani Investment i.e., Kalyani Investment and KIOCL go up and down completely randomly.

Pair Corralation between Kalyani Investment and KIOCL

Assuming the 90 days trading horizon Kalyani Investment is expected to generate 0.89 times more return on investment than KIOCL. However, Kalyani Investment is 1.12 times less risky than KIOCL. It trades about 0.08 of its potential returns per unit of risk. KIOCL Limited is currently generating about 0.03 per unit of risk. If you would invest  370,155  in Kalyani Investment on October 7, 2024 and sell it today you would earn a total of  222,560  from holding Kalyani Investment or generate 60.13% return on investment over 90 days.

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

Kalyani Investment  vs.  KIOCL Limited

Kalyani Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kalyani Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

KIOCL Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kalyani Investment and KIOCL

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

The idea behind Kalyani Investment and KIOCL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..