Correlation Between Kirr Marbach and Victory Rs

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Can any of the company-specific risk be diversified away by investing in both Kirr Marbach and Victory Rs 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 Kirr Marbach and Victory Rs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirr Marbach Partners and Victory Rs Partners, you can compare the effects of market volatilities on Kirr Marbach and Victory Rs 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 Kirr Marbach with a short position of Victory Rs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirr Marbach and Victory Rs.

Diversification Opportunities for Kirr Marbach and Victory Rs

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Kirr and VICTORY is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kirr Marbach Partners and Victory Rs Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Rs Partners and Kirr Marbach 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 Kirr Marbach Partners are associated (or correlated) with Victory Rs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Rs Partners has no effect on the direction of Kirr Marbach i.e., Kirr Marbach and Victory Rs go up and down completely randomly.

Pair Corralation between Kirr Marbach and Victory Rs

Assuming the 90 days horizon Kirr Marbach Partners is expected to generate 1.26 times more return on investment than Victory Rs. However, Kirr Marbach is 1.26 times more volatile than Victory Rs Partners. It trades about -0.13 of its potential returns per unit of risk. Victory Rs Partners is currently generating about -0.36 per unit of risk. If you would invest  3,531  in Kirr Marbach Partners on October 9, 2024 and sell it today you would lose (201.00) from holding Kirr Marbach Partners or give up 5.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Kirr Marbach Partners  vs.  Victory Rs Partners

 Performance 
       Timeline  
Kirr Marbach Partners 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kirr Marbach Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Kirr Marbach is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Victory Rs Partners 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Victory Rs Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Victory Rs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kirr Marbach and Victory Rs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kirr Marbach and Victory Rs

The main advantage of trading using opposite Kirr Marbach and Victory Rs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirr Marbach position performs unexpectedly, Victory Rs 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 Victory Rs will offset losses from the drop in Victory Rs' long position.
The idea behind Kirr Marbach Partners and Victory Rs Partners 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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