Correlation Between Kalyani Steels and Hindustan Media

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Can any of the company-specific risk be diversified away by investing in both Kalyani Steels and Hindustan Media 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 Hindustan Media 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 Hindustan Media Ventures, you can compare the effects of market volatilities on Kalyani Steels and Hindustan Media 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 Hindustan Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalyani Steels and Hindustan Media.

Diversification Opportunities for Kalyani Steels and Hindustan Media

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kalyani and Hindustan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures 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 Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and Hindustan Media go up and down completely randomly.

Pair Corralation between Kalyani Steels and Hindustan Media

Assuming the 90 days trading horizon Kalyani Steels Limited is expected to generate 2.64 times more return on investment than Hindustan Media. However, Kalyani Steels is 2.64 times more volatile than Hindustan Media Ventures. It trades about 0.51 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about 0.05 per unit of risk. If you would invest  77,450  in Kalyani Steels Limited on September 25, 2024 and sell it today you would earn a total of  42,225  from holding Kalyani Steels Limited or generate 54.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Kalyani Steels Limited  vs.  Hindustan Media Ventures

 Performance 
       Timeline  
Kalyani Steels 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.
Hindustan Media Ventures 

Risk-Adjusted Performance

0 of 100

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

Kalyani Steels and Hindustan Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kalyani Steels and Hindustan Media

The main advantage of trading using opposite Kalyani Steels and Hindustan Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalyani Steels position performs unexpectedly, Hindustan Media 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 Hindustan Media will offset losses from the drop in Hindustan Media's long position.
The idea behind Kalyani Steels Limited and Hindustan Media Ventures 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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