Correlation Between KIOCL and Global Education

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

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

Diversification Opportunities for KIOCL and Global Education

0.89

Correlation Coefficient

KIOCL  Global Education

Very poor diversification

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

Pair Corralation between KIOCL and Global Education

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Global Education. In addition to that, KIOCL is 1.12 times more volatile than Global Education Limited. It trades about -0.41 of its total potential returns per unit of risk. Global Education Limited is currently generating about -0.29 per unit of volatility. If you would invest  7,369  in Global Education Limited on December 2, 2024 and sell it today you would lose (2,232) from holding Global Education Limited or give up 30.29% 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.  Global Education Limited

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 unfluctuating 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.

Global Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Education Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KIOCL and Global Education

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

The idea behind KIOCL Limited and Global Education 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.