Correlation Between Orissa Minerals and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both Orissa Minerals 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 Orissa Minerals and Kilitch Drugs 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 Kilitch Drugs Limited, you can compare the effects of market volatilities on Orissa Minerals 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 Orissa Minerals with a short position of Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orissa Minerals and Kilitch Drugs.

Diversification Opportunities for Orissa Minerals and Kilitch Drugs

0.41

Correlation Coefficient

Orissa Minerals  Kilitch Drugs

Very weak diversification

The 3 months correlation between Orissa and Kilitch is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals 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 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 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 Orissa Minerals i.e., Orissa Minerals and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Orissa Minerals and Kilitch Drugs

Assuming the 90 days trading horizon The Orissa Minerals is expected to generate 1.22 times more return on investment than Kilitch Drugs. However, Orissa Minerals is 1.22 times more volatile than Kilitch Drugs Limited. It trades about 0.07 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.07 per unit of risk. If you would invest  304,730  in The Orissa Minerals on October 8, 2024 and sell it today you would earn a total of  421,605  from holding The Orissa Minerals or generate 138.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

The Orissa Minerals  vs.  Kilitch Drugs 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 unsteady 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.

Kilitch Drugs Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Orissa Minerals and Kilitch Drugs

The main advantage of trading using opposite Orissa Minerals and Kilitch Drugs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orissa Minerals 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 The Orissa Minerals 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.