Correlation Between Kewal Kiran and HEG

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

Diversification Opportunities for Kewal Kiran and HEG

0.24

Correlation Coefficient

Kewal Kiran  HEG

Modest diversification

The 3 months correlation between Kewal and HEG is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited 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 HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and HEG go up and down completely randomly.

Pair Corralation between Kewal Kiran and HEG

Assuming the 90 days trading horizon Kewal Kiran is expected to generate 643.88 times less return on investment than HEG. But when comparing it to its historical volatility, Kewal Kiran Clothing is 105.56 times less risky than HEG. It trades about 0.03 of its potential returns per unit of risk. HEG Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  16,890  in HEG Limited on October 25, 2024 and sell it today you would earn a total of  24,730  from holding HEG Limited or generate 146.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.45%
Values	Daily Returns

Kewal Kiran Clothing  vs.  HEG 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 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.

HEG Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEG Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, HEG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kewal Kiran and HEG

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

The idea behind Kewal Kiran Clothing and HEG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.