Correlation Between KIOCL and Jaypee Infratech

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

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

Diversification Opportunities for KIOCL and Jaypee Infratech

0.0

Correlation Coefficient

KIOCL  Jaypee Infratech

Pay attention - limited upside

The 3 months correlation between KIOCL and Jaypee is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Jaypee Infratech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaypee Infratech 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 Jaypee Infratech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaypee Infratech has no effect on the direction of KIOCL i.e., KIOCL and Jaypee Infratech go up and down completely randomly.

Pair Corralation between KIOCL and Jaypee Infratech

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 5.24 times more return on investment than Jaypee Infratech. However, KIOCL is 5.24 times more volatile than Jaypee Infratech Limited. It trades about 0.06 of its potential returns per unit of risk. Jaypee Infratech Limited is currently generating about -0.07 per unit of risk. If you would invest  21,340  in KIOCL Limited on October 10, 2024 and sell it today you would earn a total of  21,710  from holding KIOCL Limited or generate 101.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

KIOCL Limited  vs.  Jaypee Infratech Limited

KIOCL Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Jaypee Infratech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaypee Infratech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jaypee Infratech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KIOCL and Jaypee Infratech

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

The idea behind KIOCL Limited and Jaypee Infratech 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.