Correlation Between Kilitch Drugs and NIIT

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

Diversification Opportunities for Kilitch Drugs and NIIT

0.42

Correlation Coefficient

Kilitch Drugs  NIIT

Very weak diversification

The 3 months correlation between Kilitch and NIIT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and NIIT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT 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 NIIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT Limited has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and NIIT go up and down completely randomly.

Pair Corralation between Kilitch Drugs and NIIT

Assuming the 90 days trading horizon Kilitch Drugs Limited is expected to generate 0.62 times more return on investment than NIIT. However, Kilitch Drugs Limited is 1.61 times less risky than NIIT. It trades about 0.07 of its potential returns per unit of risk. NIIT Limited is currently generating about -0.15 per unit of risk. If you would invest  32,585  in Kilitch Drugs Limited on December 26, 2024 and sell it today you would earn a total of  2,880  from holding Kilitch Drugs Limited or generate 8.84% return on investment over 90 days.

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

Kilitch Drugs Limited  vs.  NIIT Limited

Kilitch Drugs Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Kilitch Drugs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NIIT Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIIT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential 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 NIIT

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

The idea behind Kilitch Drugs Limited and NIIT 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.