Correlation Between KNR Constructions and Dev Information

Can any of the company-specific risk be diversified away by investing in both KNR Constructions and Dev Information 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 KNR Constructions and Dev Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KNR Constructions Limited and Dev Information Technology, you can compare the effects of market volatilities on KNR Constructions and Dev Information 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 KNR Constructions with a short position of Dev Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNR Constructions and Dev Information.

Diversification Opportunities for KNR Constructions and Dev Information

0.93

Correlation Coefficient

KNR Constructions  Dev Information

Almost no diversification

The 3 months correlation between KNR and Dev is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited and Dev Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dev Information Tech and KNR Constructions 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 KNR Constructions Limited are associated (or correlated) with Dev Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dev Information Tech has no effect on the direction of KNR Constructions i.e., KNR Constructions and Dev Information go up and down completely randomly.

Pair Corralation between KNR Constructions and Dev Information

Assuming the 90 days trading horizon KNR Constructions Limited is expected to under-perform the Dev Information. But the stock apears to be less risky and, when comparing its historical volatility, KNR Constructions Limited is 1.14 times less risky than Dev Information. The stock trades about -0.12 of its potential returns per unit of risk. The Dev Information Technology is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  15,873  in Dev Information Technology on December 22, 2024 and sell it today you would lose (3,712) from holding Dev Information Technology or give up 23.39% of portfolio value over 90 days.

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

KNR Constructions Limited  vs.  Dev Information Technology

KNR Constructions

Risk-Adjusted Performance

Very Weak

Over the last 90 days KNR Constructions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dev Information Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dev Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KNR Constructions and Dev Information

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

The idea behind KNR Constructions Limited and Dev Information Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.