Correlation Between POWERGRID Infrastructure and Kewal Kiran

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Can any of the company-specific risk be diversified away by investing in both POWERGRID Infrastructure and Kewal Kiran 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 POWERGRID Infrastructure and Kewal Kiran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POWERGRID Infrastructure Investment and Kewal Kiran Clothing, you can compare the effects of market volatilities on POWERGRID Infrastructure and Kewal Kiran 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 POWERGRID Infrastructure with a short position of Kewal Kiran. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and Kewal Kiran.

Diversification Opportunities for POWERGRID Infrastructure and Kewal Kiran

POWERGRIDKewalDiversified AwayPOWERGRIDKewalDiversified Away100%
0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between POWERGRID and Kewal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Kewal Kiran go up and down completely randomly.

Pair Corralation between POWERGRID Infrastructure and Kewal Kiran

Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to generate 0.37 times more return on investment than Kewal Kiran. However, POWERGRID Infrastructure Investment is 2.71 times less risky than Kewal Kiran. It trades about -0.11 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about -0.1 per unit of risk. If you would invest  8,833  in POWERGRID Infrastructure Investment on October 10, 2024 and sell it today you would lose (400.00) from holding POWERGRID Infrastructure Investment or give up 4.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.77%
ValuesDaily Returns

POWERGRID Infrastructure Inves  vs.  Kewal Kiran Clothing

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -8-6-4-2024
JavaScript chart by amCharts 3.21.15PGINVIT-IV KKCL
       Timeline  
POWERGRID Infrastructure 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days POWERGRID Infrastructure Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, POWERGRID Infrastructure is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan84858687888990919293
Kewal Kiran Clothing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan580600620640660680

POWERGRID Infrastructure and Kewal Kiran Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.12-0.82-0.52-0.22-0.02380.10.40.71.0 0.20.40.60.8
JavaScript chart by amCharts 3.21.15PGINVIT-IV KKCL
       Returns  

Pair Trading with POWERGRID Infrastructure and Kewal Kiran

The main advantage of trading using opposite POWERGRID Infrastructure and Kewal Kiran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWERGRID Infrastructure position performs unexpectedly, Kewal Kiran 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 Kewal Kiran will offset losses from the drop in Kewal Kiran's long position.
The idea behind POWERGRID Infrastructure Investment and Kewal Kiran Clothing 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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