Correlation Between Kewal Kiran and LT Technology
Can any of the company-specific risk be diversified away by investing in both Kewal Kiran and LT Technology 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 LT Technology 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 LT Technology Services, you can compare the effects of market volatilities on Kewal Kiran and LT Technology 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 LT Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kewal Kiran and LT Technology.
Diversification Opportunities for Kewal Kiran and LT Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kewal and LTTS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and LT Technology Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Technology Services 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 LT Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Technology Services has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and LT Technology go up and down completely randomly.
Pair Corralation between Kewal Kiran and LT Technology
Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to generate 1.35 times more return on investment than LT Technology. However, Kewal Kiran is 1.35 times more volatile than LT Technology Services. It trades about -0.04 of its potential returns per unit of risk. LT Technology Services is currently generating about -0.32 per unit of risk. If you would invest 62,285 in Kewal Kiran Clothing on October 5, 2024 and sell it today you would lose (1,310) from holding Kewal Kiran Clothing or give up 2.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kewal Kiran Clothing vs. LT Technology Services
Performance |
Timeline |
Kewal Kiran Clothing |
LT Technology Services |
Kewal Kiran and LT Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kewal Kiran and LT Technology
The main advantage of trading using opposite Kewal Kiran and LT Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kewal Kiran position performs unexpectedly, LT Technology 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 LT Technology will offset losses from the drop in LT Technology's long position.Kewal Kiran vs. Reliance Industries Limited | Kewal Kiran vs. Oil Natural Gas | Kewal Kiran vs. Indian Oil | Kewal Kiran vs. HDFC Bank Limited |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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