Correlation Between Kalpataru Projects and Industrial Investment

Can any of the company-specific risk be diversified away by investing in both Kalpataru Projects and Industrial Investment 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 Kalpataru Projects and Industrial Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kalpataru Projects International and Industrial Investment Trust, you can compare the effects of market volatilities on Kalpataru Projects and Industrial Investment 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 Kalpataru Projects with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalpataru Projects and Industrial Investment.

Diversification Opportunities for Kalpataru Projects and Industrial Investment

-0.49

Correlation Coefficient

Kalpataru Projects  Industrial Investment

Very good diversification

The 3 months correlation between Kalpataru and Industrial is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kalpataru Projects Internation and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Kalpataru Projects 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 Kalpataru Projects International are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Kalpataru Projects i.e., Kalpataru Projects and Industrial Investment go up and down completely randomly.

Pair Corralation between Kalpataru Projects and Industrial Investment

Assuming the 90 days trading horizon Kalpataru Projects International is expected to under-perform the Industrial Investment. But the stock apears to be less risky and, when comparing its historical volatility, Kalpataru Projects International is 1.34 times less risky than Industrial Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Industrial Investment Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  29,500  in Industrial Investment Trust on October 6, 2024 and sell it today you would earn a total of  3,215  from holding Industrial Investment Trust or generate 10.9% return on investment over 90 days.

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

Kalpataru Projects Internation  vs.  Industrial Investment Trust

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalpataru Projects International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalpataru Projects is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Industrial Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kalpataru Projects and Industrial Investment

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

The idea behind Kalpataru Projects International and Industrial Investment Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.