Correlation Between Kewal Kiran and BAG Films

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

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

Diversification Opportunities for Kewal Kiran and BAG Films

0.67

Correlation Coefficient

Kewal Kiran  BAG Films

Poor diversification

The 3 months correlation between Kewal and BAG is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and BAG Films and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAG Films and Kewal Kiran 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 Kewal Kiran Clothing are associated (or correlated) with BAG Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAG Films has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and BAG Films go up and down completely randomly.

Pair Corralation between Kewal Kiran and BAG Films

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the BAG Films. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 1.89 times less risky than BAG Films. The stock trades about -0.06 of its potential returns per unit of risk. The BAG Films and is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,076  in BAG Films and on October 6, 2024 and sell it today you would lose (64.00) from holding BAG Films and or give up 5.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Kewal Kiran Clothing  vs.  BAG Films and

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BAG Films

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAG Films and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kewal Kiran and BAG Films

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

The idea behind Kewal Kiran Clothing and BAG Films and 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.