Correlation Between Kewal Kiran and Malu Paper

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

Diversification Opportunities for Kewal Kiran and Malu Paper

0.9

Correlation Coefficient

Kewal Kiran  Malu Paper

Almost no diversification

The 3 months correlation between Kewal and Malu is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Malu Paper Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malu Paper Mills 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 Malu Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malu Paper Mills has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Malu Paper go up and down completely randomly.

Pair Corralation between Kewal Kiran and Malu Paper

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to generate 0.81 times more return on investment than Malu Paper. However, Kewal Kiran Clothing is 1.23 times less risky than Malu Paper. It trades about -0.13 of its potential returns per unit of risk. Malu Paper Mills is currently generating about -0.12 per unit of risk. If you would invest  59,695  in Kewal Kiran Clothing on December 25, 2024 and sell it today you would lose (11,395) from holding Kewal Kiran Clothing or give up 19.09% of portfolio value over 90 days.

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

Kewal Kiran Clothing  vs.  Malu Paper Mills

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 weak 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.

Malu Paper Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malu Paper Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kewal Kiran and Malu Paper

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

The idea behind Kewal Kiran Clothing and Malu Paper Mills 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.