Correlation Between KNR Constructions and Mcleod Russel

Can any of the company-specific risk be diversified away by investing in both KNR Constructions and Mcleod Russel 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 Mcleod Russel 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 Mcleod Russel India, you can compare the effects of market volatilities on KNR Constructions and Mcleod Russel 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 Mcleod Russel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNR Constructions and Mcleod Russel.

Diversification Opportunities for KNR Constructions and Mcleod Russel

0.91

Correlation Coefficient

KNR Constructions  Mcleod Russel

Almost no diversification

The 3 months correlation between KNR and Mcleod is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited and Mcleod Russel India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcleod Russel India 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 Mcleod Russel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcleod Russel India has no effect on the direction of KNR Constructions i.e., KNR Constructions and Mcleod Russel go up and down completely randomly.

Pair Corralation between KNR Constructions and Mcleod Russel

Assuming the 90 days trading horizon KNR Constructions Limited is expected to under-perform the Mcleod Russel. But the stock apears to be less risky and, when comparing its historical volatility, KNR Constructions Limited is 1.26 times less risky than Mcleod Russel. The stock trades about -0.12 of its potential returns per unit of risk. The Mcleod Russel India is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,710  in Mcleod Russel India on December 25, 2024 and sell it today you would lose (986.00) from holding Mcleod Russel India or give up 20.93% 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.  Mcleod Russel India

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 unfluctuating 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.

Mcleod Russel India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mcleod Russel India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak 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 KNR Constructions and Mcleod Russel

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

The idea behind KNR Constructions Limited and Mcleod Russel India 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.