Correlation Between Kalyani Steels and Visa Steel

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

Diversification Opportunities for Kalyani Steels and Visa Steel

-0.17

Correlation Coefficient

Kalyani Steels  Visa Steel

Good diversification

The 3 months correlation between Kalyani and Visa is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and Visa Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Steel 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 Visa Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Steel Limited has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and Visa Steel go up and down completely randomly.

Pair Corralation between Kalyani Steels and Visa Steel

Assuming the 90 days trading horizon Kalyani Steels is expected to generate 1.18 times less return on investment than Visa Steel. In addition to that, Kalyani Steels is 1.11 times more volatile than Visa Steel Limited. It trades about 0.08 of its total potential returns per unit of risk. Visa Steel Limited is currently generating about 0.1 per unit of volatility. If you would invest  1,155  in Visa Steel Limited on December 2, 2024 and sell it today you would earn a total of  2,354  from holding Visa Steel Limited or generate 203.81% return on investment over 90 days.

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

Kalyani Steels Limited  vs.  Visa Steel 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 unsteady 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.

Visa Steel Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Steel Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Visa Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kalyani Steels and Visa Steel

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

The idea behind Kalyani Steels Limited and Visa Steel 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.