Correlation Between KIOCL and Dhunseri Investments

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

By analyzing existing cross correlation between KIOCL Limited and Dhunseri Investments Limited, you can compare the effects of market volatilities on KIOCL and Dhunseri Investments 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 Dhunseri Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and Dhunseri Investments.

Diversification Opportunities for KIOCL and Dhunseri Investments

0.2

Correlation Coefficient

KIOCL  Dhunseri Investments

Modest diversification

The 3 months correlation between KIOCL and Dhunseri is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Dhunseri Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhunseri Investments 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 Dhunseri Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhunseri Investments has no effect on the direction of KIOCL i.e., KIOCL and Dhunseri Investments go up and down completely randomly.

Pair Corralation between KIOCL and Dhunseri Investments

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 1.37 times more return on investment than Dhunseri Investments. However, KIOCL is 1.37 times more volatile than Dhunseri Investments Limited. It trades about 0.07 of its potential returns per unit of risk. Dhunseri Investments Limited is currently generating about 0.0 per unit of risk. If you would invest  34,715  in KIOCL Limited on October 7, 2024 and sell it today you would earn a total of  5,045  from holding KIOCL Limited or generate 14.53% return on investment over 90 days.

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

KIOCL Limited  vs.  Dhunseri Investments Limited

KIOCL Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Dhunseri Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dhunseri Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Dhunseri Investments is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with KIOCL and Dhunseri Investments

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

The idea behind KIOCL Limited and Dhunseri Investments 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 Global Correlations module to find global opportunities by holding instruments from different markets.