Correlation Between Life InsuranceOf and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both Life InsuranceOf and Kilitch Drugs 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 Life InsuranceOf and Kilitch Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Life Insurance and Kilitch Drugs Limited, you can compare the effects of market volatilities on Life InsuranceOf and Kilitch Drugs 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 Life InsuranceOf with a short position of Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life InsuranceOf and Kilitch Drugs.

Diversification Opportunities for Life InsuranceOf and Kilitch Drugs

0.21

Correlation Coefficient

Life InsuranceOf  Kilitch Drugs

Modest diversification

The 3 months correlation between Life and Kilitch is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs Limited and Life InsuranceOf 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 Life Insurance are associated (or correlated) with Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of Life InsuranceOf i.e., Life InsuranceOf and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Life InsuranceOf and Kilitch Drugs

Assuming the 90 days trading horizon Life InsuranceOf is expected to generate 3.08 times less return on investment than Kilitch Drugs. But when comparing it to its historical volatility, Life Insurance is 1.41 times less risky than Kilitch Drugs. It trades about 0.04 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,665  in Kilitch Drugs Limited on December 2, 2024 and sell it today you would earn a total of  18,235  from holding Kilitch Drugs Limited or generate 143.98% return on investment over 90 days.

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

Life Insurance  vs.  Kilitch Drugs Limited

Life InsuranceOf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Life Insurance 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kilitch Drugs Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Life InsuranceOf and Kilitch Drugs

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

The idea behind Life Insurance and Kilitch Drugs 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.