Correlation Between KIOCL and Akme Fintrade

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

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

Diversification Opportunities for KIOCL and Akme Fintrade

0.74

Correlation Coefficient

KIOCL  Akme Fintrade

Poor diversification

The 3 months correlation between KIOCL and Akme is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Akme Fintrade India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akme Fintrade India and KIOCL 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 KIOCL Limited are associated (or correlated) with Akme Fintrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akme Fintrade India has no effect on the direction of KIOCL i.e., KIOCL and Akme Fintrade go up and down completely randomly.

Pair Corralation between KIOCL and Akme Fintrade

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Akme Fintrade. But the stock apears to be less risky and, when comparing its historical volatility, KIOCL Limited is 1.01 times less risky than Akme Fintrade. The stock trades about -0.14 of its potential returns per unit of risk. The Akme Fintrade India is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  8,969  in Akme Fintrade India on December 30, 2024 and sell it today you would lose (2,450) from holding Akme Fintrade India or give up 27.32% of portfolio value over 90 days.

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

KIOCL Limited  vs.  Akme Fintrade India

KIOCL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIOCL 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Akme Fintrade India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akme Fintrade India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KIOCL and Akme Fintrade

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

The idea behind KIOCL Limited and Akme Fintrade India 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..