Correlation Between Man Infraconstructio and Kalpataru Projects

Can any of the company-specific risk be diversified away by investing in both Man Infraconstructio and Kalpataru Projects 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 Man Infraconstructio and Kalpataru Projects into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Man Infraconstruction Limited and Kalpataru Projects International, you can compare the effects of market volatilities on Man Infraconstructio and Kalpataru Projects 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 Man Infraconstructio with a short position of Kalpataru Projects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Man Infraconstructio and Kalpataru Projects.

Diversification Opportunities for Man Infraconstructio and Kalpataru Projects

0.09

Correlation Coefficient

Man Infraconstructio  Kalpataru Projects

Significant diversification

The 3 months correlation between Man and Kalpataru is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Man Infraconstruction Limited and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects and Man Infraconstructio 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 Man Infraconstruction Limited are associated (or correlated) with Kalpataru Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalpataru Projects has no effect on the direction of Man Infraconstructio i.e., Man Infraconstructio and Kalpataru Projects go up and down completely randomly.

Pair Corralation between Man Infraconstructio and Kalpataru Projects

Assuming the 90 days trading horizon Man Infraconstruction Limited is expected to generate 1.53 times more return on investment than Kalpataru Projects. However, Man Infraconstructio is 1.53 times more volatile than Kalpataru Projects International. It trades about 0.22 of its potential returns per unit of risk. Kalpataru Projects International is currently generating about 0.03 per unit of risk. If you would invest  19,302  in Man Infraconstruction Limited on October 6, 2024 and sell it today you would earn a total of  5,679  from holding Man Infraconstruction Limited or generate 29.42% return on investment over 90 days.

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

Man Infraconstruction Limited  vs.  Kalpataru Projects Internation

Man Infraconstruction

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Man Infraconstructio and Kalpataru Projects

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

The idea behind Man Infraconstruction Limited and Kalpataru Projects International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.