Correlation Between Kilitch Drugs and Spentex Industries

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

Diversification Opportunities for Kilitch Drugs and Spentex Industries

0.0

Correlation Coefficient

Kilitch Drugs  Spentex Industries

Pay attention - limited upside

The 3 months correlation between Kilitch and Spentex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and Spentex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spentex Industries 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 Spentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spentex Industries has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and Spentex Industries go up and down completely randomly.

Pair Corralation between Kilitch Drugs and Spentex Industries

If you would invest  31,065  in Kilitch Drugs Limited on September 29, 2024 and sell it today you would earn a total of  1,380  from holding Kilitch Drugs Limited or generate 4.44% return on investment over 90 days.

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

Kilitch Drugs Limited  vs.  Spentex Industries Limited

Kilitch Drugs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Spentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kilitch Drugs and Spentex Industries

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

The idea behind Kilitch Drugs Limited and Spentex Industries 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.