Correlation Between Kilitch Drugs and Steelcast

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

Diversification Opportunities for Kilitch Drugs and Steelcast

0.15

Correlation Coefficient

Kilitch Drugs  Steelcast

Average diversification

The 3 months correlation between Kilitch and Steelcast is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast 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 Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and Steelcast go up and down completely randomly.

Pair Corralation between Kilitch Drugs and Steelcast

Assuming the 90 days trading horizon Kilitch Drugs Limited is expected to generate 1.18 times more return on investment than Steelcast. However, Kilitch Drugs is 1.18 times more volatile than Steelcast Limited. It trades about 0.06 of its potential returns per unit of risk. Steelcast Limited is currently generating about 0.07 per unit of risk. If you would invest  16,405  in Kilitch Drugs Limited on October 4, 2024 and sell it today you would earn a total of  16,215  from holding Kilitch Drugs Limited or generate 98.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Kilitch Drugs Limited  vs.  Steelcast 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Steelcast Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Steelcast may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kilitch Drugs and Steelcast

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

The idea behind Kilitch Drugs Limited and Steelcast 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.