Correlation Between Motilal Oswal and Kavveri Telecom

Can any of the company-specific risk be diversified away by investing in both Motilal Oswal and Kavveri Telecom 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 Motilal Oswal and Kavveri Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Motilal Oswal Financial and Kavveri Telecom Products, you can compare the effects of market volatilities on Motilal Oswal and Kavveri Telecom 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 Motilal Oswal with a short position of Kavveri Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motilal Oswal and Kavveri Telecom.

Diversification Opportunities for Motilal Oswal and Kavveri Telecom

0.53

Correlation Coefficient

Motilal Oswal  Kavveri Telecom

Very weak diversification

The 3 months correlation between Motilal and Kavveri is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Motilal Oswal Financial and Kavveri Telecom Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavveri Telecom Products and Motilal Oswal 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 Motilal Oswal Financial are associated (or correlated) with Kavveri Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavveri Telecom Products has no effect on the direction of Motilal Oswal i.e., Motilal Oswal and Kavveri Telecom go up and down completely randomly.

Pair Corralation between Motilal Oswal and Kavveri Telecom

Assuming the 90 days trading horizon Motilal Oswal Financial is expected to generate 1.23 times more return on investment than Kavveri Telecom. However, Motilal Oswal is 1.23 times more volatile than Kavveri Telecom Products. It trades about 0.12 of its potential returns per unit of risk. Kavveri Telecom Products is currently generating about 0.05 per unit of risk. If you would invest  75,890  in Motilal Oswal Financial on September 3, 2024 and sell it today you would earn a total of  18,720  from holding Motilal Oswal Financial or generate 24.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Motilal Oswal Financial  vs.  Kavveri Telecom Products

Motilal Oswal Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kavveri Telecom Products

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kavveri Telecom Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Kavveri Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Motilal Oswal and Kavveri Telecom

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

The idea behind Motilal Oswal Financial and Kavveri Telecom Products 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.