Correlation Between Kilitch Drugs and EPL

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

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

Diversification Opportunities for Kilitch Drugs and EPL

0.13

Correlation Coefficient

Kilitch Drugs  EPL

Average diversification

The 3 months correlation between Kilitch and EPL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and EPL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPL Limited and Kilitch Drugs 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 Kilitch Drugs Limited are associated (or correlated) with EPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPL Limited has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and EPL go up and down completely randomly.

Pair Corralation between Kilitch Drugs and EPL

Assuming the 90 days trading horizon Kilitch Drugs Limited is expected to generate 0.75 times more return on investment than EPL. However, Kilitch Drugs Limited is 1.33 times less risky than EPL. It trades about 0.1 of its potential returns per unit of risk. EPL Limited is currently generating about -0.11 per unit of risk. If you would invest  31,745  in Kilitch Drugs Limited on December 30, 2024 and sell it today you would earn a total of  4,515  from holding Kilitch Drugs Limited or generate 14.22% return on investment over 90 days.

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

Kilitch Drugs Limited  vs.  EPL Limited

Kilitch Drugs Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Kilitch Drugs demonstrated solid returns over the last few months and may actually be approaching a breakup point.

EPL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Kilitch Drugs and EPL

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

The idea behind Kilitch Drugs Limited and EPL 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.