Correlation Between KIOCL and Shemaroo Entertainment

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

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

Diversification Opportunities for KIOCL and Shemaroo Entertainment

0.93

Correlation Coefficient

KIOCL  Shemaroo Entertainment

Almost no diversification

The 3 months correlation between KIOCL and Shemaroo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Shemaroo Entertainment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shemaroo Entertainment 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 Shemaroo Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shemaroo Entertainment has no effect on the direction of KIOCL i.e., KIOCL and Shemaroo Entertainment go up and down completely randomly.

Pair Corralation between KIOCL and Shemaroo Entertainment

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 0.96 times more return on investment than Shemaroo Entertainment. However, KIOCL Limited is 1.04 times less risky than Shemaroo Entertainment. It trades about -0.15 of its potential returns per unit of risk. Shemaroo Entertainment Limited is currently generating about -0.18 per unit of risk. If you would invest  35,500  in KIOCL Limited on December 27, 2024 and sell it today you would lose (11,729) from holding KIOCL Limited or give up 33.04% 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.  Shemaroo Entertainment Limited

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 unsteady 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.

Shemaroo Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shemaroo Entertainment 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.

Pair Trading with KIOCL and Shemaroo Entertainment

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

The idea behind KIOCL Limited and Shemaroo Entertainment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.