Correlation Between Orissa Minerals and KEI Industries

Can any of the company-specific risk be diversified away by investing in both Orissa Minerals and KEI Industries 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 Orissa Minerals and KEI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Orissa Minerals and KEI Industries Limited, you can compare the effects of market volatilities on Orissa Minerals and KEI Industries 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 Orissa Minerals with a short position of KEI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orissa Minerals and KEI Industries.

Diversification Opportunities for Orissa Minerals and KEI Industries

0.16

Correlation Coefficient

Orissa Minerals  KEI Industries

Average diversification

The 3 months correlation between Orissa and KEI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals and KEI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEI Industries and Orissa Minerals 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 The Orissa Minerals are associated (or correlated) with KEI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEI Industries has no effect on the direction of Orissa Minerals i.e., Orissa Minerals and KEI Industries go up and down completely randomly.

Pair Corralation between Orissa Minerals and KEI Industries

Assuming the 90 days trading horizon The Orissa Minerals is expected to under-perform the KEI Industries. But the stock apears to be less risky and, when comparing its historical volatility, The Orissa Minerals is 1.5 times less risky than KEI Industries. The stock trades about -0.3 of its potential returns per unit of risk. The KEI Industries Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  445,400  in KEI Industries Limited on October 6, 2024 and sell it today you would lose (9,015) from holding KEI Industries Limited or give up 2.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

The Orissa Minerals  vs.  KEI Industries Limited

Orissa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KEI Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KEI Industries Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, KEI Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Orissa Minerals and KEI Industries

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

The idea behind The Orissa Minerals and KEI Industries 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.