Correlation Between KIOCL and Kewal Kiran

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

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

Diversification Opportunities for KIOCL and Kewal Kiran

0.84

Correlation Coefficient

KIOCL  Kewal Kiran

Very poor diversification

The 3 months correlation between KIOCL and Kewal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing 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 Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of KIOCL i.e., KIOCL and Kewal Kiran go up and down completely randomly.

Pair Corralation between KIOCL and Kewal Kiran

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Kewal Kiran. In addition to that, KIOCL is 1.55 times more volatile than Kewal Kiran Clothing. It trades about -0.14 of its total potential returns per unit of risk. Kewal Kiran Clothing is currently generating about -0.14 per unit of volatility. If you would invest  57,825  in Kewal Kiran Clothing on December 28, 2024 and sell it today you would lose (11,800) from holding Kewal Kiran Clothing or give up 20.41% 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.  Kewal Kiran Clothing

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.

Kewal Kiran Clothing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KIOCL and Kewal Kiran

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

The idea behind KIOCL Limited and Kewal Kiran Clothing 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.