Correlation Between PC Jeweller and Kaushalya Infrastructure

Can any of the company-specific risk be diversified away by investing in both PC Jeweller and Kaushalya Infrastructure 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 PC Jeweller and Kaushalya Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PC Jeweller Limited and Kaushalya Infrastructure Development, you can compare the effects of market volatilities on PC Jeweller and Kaushalya Infrastructure 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 PC Jeweller with a short position of Kaushalya Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of PC Jeweller and Kaushalya Infrastructure.

Diversification Opportunities for PC Jeweller and Kaushalya Infrastructure

-0.15

Correlation Coefficient

PC Jeweller  Kaushalya Infrastructure

Good diversification

The 3 months correlation between PCJEWELLER and Kaushalya is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PC Jeweller Limited and Kaushalya Infrastructure Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaushalya Infrastructure and PC Jeweller 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 PC Jeweller Limited are associated (or correlated) with Kaushalya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaushalya Infrastructure has no effect on the direction of PC Jeweller i.e., PC Jeweller and Kaushalya Infrastructure go up and down completely randomly.

Pair Corralation between PC Jeweller and Kaushalya Infrastructure

Assuming the 90 days trading horizon PC Jeweller Limited is expected to under-perform the Kaushalya Infrastructure. In addition to that, PC Jeweller is 12.21 times more volatile than Kaushalya Infrastructure Development. It trades about -0.18 of its total potential returns per unit of risk. Kaushalya Infrastructure Development is currently generating about -0.04 per unit of volatility. If you would invest  93,380  in Kaushalya Infrastructure Development on September 23, 2024 and sell it today you would lose (1,620) from holding Kaushalya Infrastructure Development or give up 1.73% of portfolio value over 90 days.

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

PC Jeweller Limited  vs.  Kaushalya Infrastructure Devel

PC Jeweller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PC Jeweller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PC Jeweller and Kaushalya Infrastructure

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

The idea behind PC Jeweller Limited and Kaushalya Infrastructure Development 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.