Correlation Between Kalyani Steels and Vibhor Steel

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

Diversification Opportunities for Kalyani Steels and Vibhor Steel

-0.45

Correlation Coefficient

Kalyani Steels  Vibhor Steel

Very good diversification

The 3 months correlation between Kalyani and Vibhor is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and Vibhor Steel Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vibhor Steel Tubes 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 Vibhor Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vibhor Steel Tubes has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and Vibhor Steel go up and down completely randomly.

Pair Corralation between Kalyani Steels and Vibhor Steel

Assuming the 90 days trading horizon Kalyani Steels Limited is expected to generate 0.98 times more return on investment than Vibhor Steel. However, Kalyani Steels Limited is 1.03 times less risky than Vibhor Steel. It trades about 0.1 of its potential returns per unit of risk. Vibhor Steel Tubes is currently generating about -0.1 per unit of risk. If you would invest  33,186  in Kalyani Steels Limited on October 11, 2024 and sell it today you would earn a total of  75,389  from holding Kalyani Steels Limited or generate 227.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.36%
Values	Daily Returns

Kalyani Steels Limited  vs.  Vibhor Steel Tubes

Kalyani Steels

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vibhor Steel Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhor Steel Tubes 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kalyani Steels and Vibhor Steel

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

The idea behind Kalyani Steels Limited and Vibhor Steel Tubes 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.