Correlation Between Kalpataru Projects and KEC International

Can any of the company-specific risk be diversified away by investing in both Kalpataru Projects and KEC International 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 KEC International 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 KEC International Limited, you can compare the effects of market volatilities on Kalpataru Projects and KEC International 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 KEC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalpataru Projects and KEC International.

Diversification Opportunities for Kalpataru Projects and KEC International

0.24

Correlation Coefficient

Kalpataru Projects  KEC International

Modest diversification

The 3 months correlation between Kalpataru and KEC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kalpataru Projects Internation and KEC International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEC International 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 KEC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEC International has no effect on the direction of Kalpataru Projects i.e., Kalpataru Projects and KEC International go up and down completely randomly.

Pair Corralation between Kalpataru Projects and KEC International

Assuming the 90 days trading horizon Kalpataru Projects International is expected to generate 0.97 times more return on investment than KEC International. However, Kalpataru Projects International is 1.03 times less risky than KEC International. It trades about 0.11 of its potential returns per unit of risk. KEC International Limited is currently generating about 0.09 per unit of risk. If you would invest  51,063  in Kalpataru Projects International on October 5, 2024 and sell it today you would earn a total of  76,547  from holding Kalpataru Projects International or generate 149.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.2%
Values	Daily Returns

Kalpataru Projects Internation  vs.  KEC International Limited

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

KEC International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KEC International Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, KEC International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kalpataru Projects and KEC International

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

The idea behind Kalpataru Projects International and KEC International 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.