Correlation Between Kewal Kiran and Niraj Ispat

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

Diversification Opportunities for Kewal Kiran and Niraj Ispat

-0.67

Correlation Coefficient

Kewal Kiran  Niraj Ispat

Excellent diversification

The 3 months correlation between Kewal and Niraj is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat Industries 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Niraj Ispat go up and down completely randomly.

Pair Corralation between Kewal Kiran and Niraj Ispat

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to under-perform the Niraj Ispat. But the stock apears to be less risky and, when comparing its historical volatility, Kewal Kiran Clothing is 2.31 times less risky than Niraj Ispat. The stock trades about -0.05 of its potential returns per unit of risk. The Niraj Ispat Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,200  in Niraj Ispat Industries on October 9, 2024 and sell it today you would earn a total of  13,318  from holding Niraj Ispat Industries or generate 118.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.78%
Values	Daily Returns

Kewal Kiran Clothing  vs.  Niraj Ispat Industries

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.

Niraj Ispat Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kewal Kiran and Niraj Ispat

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

The idea behind Kewal Kiran Clothing and Niraj Ispat Industries 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.