Correlation Between Kotak Mahindra and Man Infraconstructio

Can any of the company-specific risk be diversified away by investing in both Kotak Mahindra and Man Infraconstructio 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 Kotak Mahindra and Man Infraconstructio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kotak Mahindra Bank and Man Infraconstruction Limited, you can compare the effects of market volatilities on Kotak Mahindra and Man Infraconstructio 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 Kotak Mahindra with a short position of Man Infraconstructio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kotak Mahindra and Man Infraconstructio.

Diversification Opportunities for Kotak Mahindra and Man Infraconstructio

-0.84

Correlation Coefficient

Kotak Mahindra  Man Infraconstructio

Pay attention - limited upside

The 3 months correlation between Kotak and Man is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kotak Mahindra Bank and Man Infraconstruction Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Infraconstruction and Kotak Mahindra 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 Kotak Mahindra Bank are associated (or correlated) with Man Infraconstructio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Infraconstruction has no effect on the direction of Kotak Mahindra i.e., Kotak Mahindra and Man Infraconstructio go up and down completely randomly.

Pair Corralation between Kotak Mahindra and Man Infraconstructio

Assuming the 90 days trading horizon Kotak Mahindra Bank is expected to generate 0.59 times more return on investment than Man Infraconstructio. However, Kotak Mahindra Bank is 1.7 times less risky than Man Infraconstructio. It trades about 0.2 of its potential returns per unit of risk. Man Infraconstruction Limited is currently generating about -0.22 per unit of risk. If you would invest  175,915  in Kotak Mahindra Bank on December 25, 2024 and sell it today you would earn a total of  41,085  from holding Kotak Mahindra Bank or generate 23.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kotak Mahindra Bank  vs.  Man Infraconstruction Limited

Kotak Mahindra Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kotak Mahindra Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kotak Mahindra sustained solid returns over the last few months and may actually be approaching a breakup point.

Man Infraconstruction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Man Infraconstruction Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental 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 Kotak Mahindra and Man Infraconstructio

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

The idea behind Kotak Mahindra Bank and Man Infraconstruction 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.