Correlation Between KIOCL and Fine Organic

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

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

Diversification Opportunities for KIOCL and Fine Organic

0.89

Correlation Coefficient

KIOCL  Fine Organic

Very poor diversification

The 3 months correlation between KIOCL and Fine is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Fine Organic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Organic Industries 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 Fine Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Organic Industries has no effect on the direction of KIOCL i.e., KIOCL and Fine Organic go up and down completely randomly.

Pair Corralation between KIOCL and Fine Organic

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Fine Organic. In addition to that, KIOCL is 1.77 times more volatile than Fine Organic Industries. It trades about -0.13 of its total potential returns per unit of risk. Fine Organic Industries is currently generating about -0.1 per unit of volatility. If you would invest  460,050  in Fine Organic Industries on December 25, 2024 and sell it today you would lose (62,810) from holding Fine Organic Industries or give up 13.65% of portfolio value over 90 days.

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

KIOCL Limited  vs.  Fine Organic Industries

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fine Organic Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KIOCL and Fine Organic

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

The idea behind KIOCL Limited and Fine Organic Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.