Correlation Between Kalyani Steels and Country Club

Can any of the company-specific risk be diversified away by investing in both Kalyani Steels and Country Club 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 Kalyani Steels and Country Club into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kalyani Steels Limited and Country Club Hospitality, you can compare the effects of market volatilities on Kalyani Steels and Country Club 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 Kalyani Steels with a short position of Country Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalyani Steels and Country Club.

Diversification Opportunities for Kalyani Steels and Country Club

0.2

Correlation Coefficient

Kalyani Steels  Country Club

Modest diversification

The 3 months correlation between Kalyani and Country is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and Country Club Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Club Hospitality and Kalyani Steels 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 Kalyani Steels Limited are associated (or correlated) with Country Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Club Hospitality has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and Country Club go up and down completely randomly.

Pair Corralation between Kalyani Steels and Country Club

Assuming the 90 days trading horizon Kalyani Steels Limited is expected to generate 0.77 times more return on investment than Country Club. However, Kalyani Steels Limited is 1.3 times less risky than Country Club. It trades about 0.11 of its potential returns per unit of risk. Country Club Hospitality is currently generating about 0.07 per unit of risk. If you would invest  34,894  in Kalyani Steels Limited on September 20, 2024 and sell it today you would earn a total of  90,016  from holding Kalyani Steels Limited or generate 257.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Kalyani Steels Limited  vs.  Country Club Hospitality

Kalyani Steels

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kalyani Steels and Country Club

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

The idea behind Kalyani Steels Limited and Country Club Hospitality 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.