Correlation Between KIOCL and Hexa Tradex

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

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

Diversification Opportunities for KIOCL and Hexa Tradex

0.55

Correlation Coefficient

KIOCL  Hexa Tradex

Very weak diversification

The 3 months correlation between KIOCL and Hexa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited 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 Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of KIOCL i.e., KIOCL and Hexa Tradex go up and down completely randomly.

Pair Corralation between KIOCL and Hexa Tradex

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 1.64 times more return on investment than Hexa Tradex. However, KIOCL is 1.64 times more volatile than Hexa Tradex Limited. It trades about 0.1 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about 0.0 per unit of risk. If you would invest  34,290  in KIOCL Limited on October 7, 2024 and sell it today you would earn a total of  5,470  from holding KIOCL Limited or generate 15.95% return on investment over 90 days.

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

KIOCL Limited  vs.  Hexa Tradex 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.

Hexa Tradex Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hexa Tradex Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Hexa Tradex is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KIOCL and Hexa Tradex

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

The idea behind KIOCL Limited and Hexa Tradex 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.