Correlation Between KIOCL and Lakshmi Finance

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

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

Diversification Opportunities for KIOCL and Lakshmi Finance

0.0

Correlation Coefficient

KIOCL  Lakshmi Finance

Pay attention - limited upside

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

Pair Corralation between KIOCL and Lakshmi Finance

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 1.85 times more return on investment than Lakshmi Finance. However, KIOCL is 1.85 times more volatile than Lakshmi Finance Industrial. It trades about 0.0 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about -0.18 per unit of risk. If you would invest  37,700  in KIOCL Limited on October 22, 2024 and sell it today you would lose (820.00) from holding KIOCL Limited or give up 2.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

KIOCL Limited  vs.  Lakshmi Finance Industrial

KIOCL Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIOCL Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, KIOCL displayed solid returns over the last few months and may actually be approaching a breakup point.

Lakshmi Finance Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakshmi Finance Industrial 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KIOCL and Lakshmi Finance

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

The idea behind KIOCL Limited and Lakshmi Finance Industrial 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.