Correlation Between Kewal Kiran and Himadri Speciality

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

Diversification Opportunities for Kewal Kiran and Himadri Speciality

0.68

Correlation Coefficient

Kewal Kiran  Himadri Speciality

Poor diversification

The 3 months correlation between Kewal and Himadri is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Himadri Speciality Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himadri Speciality 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 Himadri Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himadri Speciality has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Himadri Speciality go up and down completely randomly.

Pair Corralation between Kewal Kiran and Himadri Speciality

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Himadri Speciality. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 1.04 times less risky than Himadri Speciality. The stock trades about -0.18 of its potential returns per unit of risk. The Himadri Speciality Chemical is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  53,430  in Himadri Speciality Chemical on December 2, 2024 and sell it today you would lose (12,605) from holding Himadri Speciality Chemical or give up 23.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Kewal Kiran Clothing  vs.  Himadri Speciality Chemical

Kewal Kiran Clothing

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Himadri Speciality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Himadri Speciality Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kewal Kiran and Himadri Speciality

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

The idea behind Kewal Kiran Clothing and Himadri Speciality Chemical 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.