Correlation Between Orissa Minerals and Kalpataru Projects

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

Diversification Opportunities for Orissa Minerals and Kalpataru Projects

0.71

Correlation Coefficient

Orissa Minerals  Kalpataru Projects

Poor diversification

The 3 months correlation between Orissa and Kalpataru is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Orissa Minerals and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects 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 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 Orissa Minerals i.e., Orissa Minerals and Kalpataru Projects go up and down completely randomly.

Pair Corralation between Orissa Minerals and Kalpataru Projects

Assuming the 90 days trading horizon Orissa Minerals is expected to generate 1.09 times less return on investment than Kalpataru Projects. In addition to that, Orissa Minerals is 1.45 times more volatile than Kalpataru Projects International. It trades about 0.07 of its total potential returns per unit of risk. Kalpataru Projects International is currently generating about 0.12 per unit of volatility. If you would invest  51,063  in Kalpataru Projects International on September 20, 2024 and sell it today you would earn a total of  80,372  from holding Kalpataru Projects International or generate 157.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	79.22%
Values	Daily Returns

The Orissa Minerals  vs.  Kalpataru Projects Internation

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 Orissa Minerals and Kalpataru Projects

The main advantage of trading using opposite Orissa Minerals and Kalpataru Projects positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orissa Minerals 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 The Orissa Minerals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.