Correlation Between Kewal Kiran and Elin Electronics

Can any of the company-specific risk be diversified away by investing in both Kewal Kiran and Elin Electronics 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 Elin Electronics 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 Elin Electronics Limited, you can compare the effects of market volatilities on Kewal Kiran and Elin Electronics 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 Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kewal Kiran and Elin Electronics.

Diversification Opportunities for Kewal Kiran and Elin Electronics

0.79

Correlation Coefficient

Kewal Kiran  Elin Electronics

Poor diversification

The 3 months correlation between Kewal and Elin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics 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 Elin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elin Electronics has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Elin Electronics go up and down completely randomly.

Pair Corralation between Kewal Kiran and Elin Electronics

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Elin Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 1.66 times less risky than Elin Electronics. The stock trades about -0.05 of its potential returns per unit of risk. The Elin Electronics Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,765  in Elin Electronics Limited on September 20, 2024 and sell it today you would earn a total of  6,609  from holding Elin Electronics Limited or generate 44.76% return on investment over 90 days.

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

Kewal Kiran Clothing  vs.  Elin Electronics Limited

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.

Elin Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elin Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with Kewal Kiran and Elin Electronics

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

The idea behind Kewal Kiran Clothing and Elin Electronics 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.