Correlation Between Kewal Kiran and Embassy Office

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

Diversification Opportunities for Kewal Kiran and Embassy Office

0.43

Correlation Coefficient

Kewal Kiran  Embassy Office

Very weak diversification

The 3 months correlation between Kewal and Embassy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Embassy Office Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embassy Office Parks 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 Embassy Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embassy Office Parks has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Embassy Office go up and down completely randomly.

Pair Corralation between Kewal Kiran and Embassy Office

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Embassy Office. In addition to that, Kewal Kiran is 1.55 times more volatile than Embassy Office Parks. It trades about -0.11 of its total potential returns per unit of risk. Embassy Office Parks is currently generating about -0.05 per unit of volatility. If you would invest  38,999  in Embassy Office Parks on October 23, 2024 and sell it today you would lose (1,724) from holding Embassy Office Parks or give up 4.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Kewal Kiran Clothing  vs.  Embassy Office Parks

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 uncertain 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.

Embassy Office Parks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embassy Office Parks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Embassy Office is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kewal Kiran and Embassy Office

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

The idea behind Kewal Kiran Clothing and Embassy Office Parks 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.