Correlation Between Kilitch Drugs and SBI Life

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

Diversification Opportunities for Kilitch Drugs and SBI Life

-0.01

Correlation Coefficient

Kilitch Drugs  SBI Life

Good diversification

The 3 months correlation between Kilitch and SBI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and SBI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Life Insurance 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 SBI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Life Insurance has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and SBI Life go up and down completely randomly.

Pair Corralation between Kilitch Drugs and SBI Life

Assuming the 90 days trading horizon Kilitch Drugs Limited is expected to generate 1.61 times more return on investment than SBI Life. However, Kilitch Drugs is 1.61 times more volatile than SBI Life Insurance. It trades about 0.03 of its potential returns per unit of risk. SBI Life Insurance is currently generating about -0.17 per unit of risk. If you would invest  33,580  in Kilitch Drugs Limited on October 11, 2024 and sell it today you would earn a total of  930.00  from holding Kilitch Drugs Limited or generate 2.77% return on investment over 90 days.

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

Kilitch Drugs Limited  vs.  SBI Life Insurance

Kilitch Drugs Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SBI Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Life Insurance 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 forward indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kilitch Drugs and SBI Life

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

The idea behind Kilitch Drugs Limited and SBI Life Insurance 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.