Correlation Between Kalyani Steels and NMDC

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

Diversification Opportunities for Kalyani Steels and NMDC

0.07

Correlation Coefficient

Kalyani Steels  NMDC

Significant diversification

The 3 months correlation between Kalyani and NMDC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and NMDC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMDC Limited 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 NMDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMDC Limited has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and NMDC go up and down completely randomly.

Pair Corralation between Kalyani Steels and NMDC

Assuming the 90 days trading horizon Kalyani Steels Limited is expected to under-perform the NMDC. In addition to that, Kalyani Steels is 1.14 times more volatile than NMDC Limited. It trades about -0.2 of its total potential returns per unit of risk. NMDC Limited is currently generating about 0.05 per unit of volatility. If you would invest  6,464  in NMDC Limited on December 30, 2024 and sell it today you would earn a total of  425.00  from holding NMDC Limited or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kalyani Steels Limited  vs.  NMDC Limited

Kalyani Steels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kalyani Steels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NMDC Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NMDC Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, NMDC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kalyani Steels and NMDC

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

The idea behind Kalyani Steels Limited and NMDC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.