Correlation Between KIOCL and Diligent Media

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

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

Diversification Opportunities for KIOCL and Diligent Media

0.23

Correlation Coefficient

KIOCL  Diligent Media

Modest diversification

The 3 months correlation between KIOCL and Diligent is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media 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 Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of KIOCL i.e., KIOCL and Diligent Media go up and down completely randomly.

Pair Corralation between KIOCL and Diligent Media

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Diligent Media. But the stock apears to be less risky and, when comparing its historical volatility, KIOCL Limited is 1.69 times less risky than Diligent Media. The stock trades about -0.35 of its potential returns per unit of risk. The Diligent Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  522.00  in Diligent Media on November 29, 2024 and sell it today you would earn a total of  34.00  from holding Diligent Media or generate 6.51% 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.  Diligent Media

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Diligent Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Diligent Media demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIOCL and Diligent Media

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

The idea behind KIOCL Limited and Diligent Media 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.