Correlation Between KIOCL and PTC India

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

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

Diversification Opportunities for KIOCL and PTC India

0.91

Correlation Coefficient

KIOCL  PTC India

Almost no diversification

The 3 months correlation between KIOCL and PTC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and PTC India Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Financial 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 PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Financial has no effect on the direction of KIOCL i.e., KIOCL and PTC India go up and down completely randomly.

Pair Corralation between KIOCL and PTC India

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the PTC India. In addition to that, KIOCL is 1.21 times more volatile than PTC India Financial. It trades about -0.15 of its total potential returns per unit of risk. PTC India Financial is currently generating about -0.1 per unit of volatility. If you would invest  3,978  in PTC India Financial on December 23, 2024 and sell it today you would lose (776.00) from holding PTC India Financial or give up 19.51% of portfolio value over 90 days.

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

KIOCL Limited  vs.  PTC India Financial

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 weak 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.

PTC India Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with KIOCL and PTC India

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

The idea behind KIOCL Limited and PTC India Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .