Correlation Between Kewal Kiran and Xchanging Solutions

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

Diversification Opportunities for Kewal Kiran and Xchanging Solutions

0.41

Correlation Coefficient

Kewal Kiran  Xchanging Solutions

Very weak diversification

The 3 months correlation between Kewal and Xchanging is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and Xchanging Solutions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xchanging Solutions 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 Xchanging Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xchanging Solutions has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and Xchanging Solutions go up and down completely randomly.

Pair Corralation between Kewal Kiran and Xchanging Solutions

Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to generate 0.79 times more return on investment than Xchanging Solutions. However, Kewal Kiran Clothing is 1.26 times less risky than Xchanging Solutions. It trades about 0.03 of its potential returns per unit of risk. Xchanging Solutions Limited is currently generating about -0.08 per unit of risk. If you would invest  61,315  in Kewal Kiran Clothing on September 5, 2024 and sell it today you would earn a total of  1,055  from holding Kewal Kiran Clothing or generate 1.72% return on investment over 90 days.

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

Kewal Kiran Clothing  vs.  Xchanging Solutions Limited

Kewal Kiran Clothing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kewal Kiran Clothing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kewal Kiran is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Xchanging Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xchanging Solutions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kewal Kiran and Xchanging Solutions

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

The idea behind Kewal Kiran Clothing and Xchanging Solutions Limited 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.