Correlation Between Kewal Kiran and Kaushalya Infrastructure

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

Diversification Opportunities for Kewal Kiran and Kaushalya Infrastructure

0.07

Correlation Coefficient

Kewal Kiran  Kaushalya Infrastructure

Significant diversification

The 3 months correlation between Kewal and Kaushalya is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Kaushalya Infrastructure Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaushalya Infrastructure 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 Kaushalya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaushalya Infrastructure has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Kaushalya Infrastructure go up and down completely randomly.

Pair Corralation between Kewal Kiran and Kaushalya Infrastructure

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Kaushalya Infrastructure. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 1.79 times less risky than Kaushalya Infrastructure. The stock trades about -0.1 of its potential returns per unit of risk. The Kaushalya Infrastructure Development is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  69,635  in Kaushalya Infrastructure Development on September 25, 2024 and sell it today you would earn a total of  23,005  from holding Kaushalya Infrastructure Development or generate 33.04% return on investment over 90 days.

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

Kewal Kiran Clothing  vs.  Kaushalya Infrastructure Devel

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 conflicting 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.

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kewal Kiran and Kaushalya Infrastructure

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

The idea behind Kewal Kiran Clothing and Kaushalya Infrastructure Development 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.