Correlation Between Power Mech and Kalyani Investment

Can any of the company-specific risk be diversified away by investing in both Power Mech and Kalyani Investment 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 Power Mech and Kalyani Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Mech Projects and Kalyani Investment, you can compare the effects of market volatilities on Power Mech and Kalyani Investment 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 Power Mech with a short position of Kalyani Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Mech and Kalyani Investment.

Diversification Opportunities for Power Mech and Kalyani Investment

-0.04

Correlation Coefficient

Power Mech  Kalyani Investment

Good diversification

The 3 months correlation between Power and Kalyani is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Power Mech Projects and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment and Power Mech 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 Power Mech Projects are associated (or correlated) with Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of Power Mech i.e., Power Mech and Kalyani Investment go up and down completely randomly.

Pair Corralation between Power Mech and Kalyani Investment

Assuming the 90 days trading horizon Power Mech Projects is expected to generate 1.19 times more return on investment than Kalyani Investment. However, Power Mech is 1.19 times more volatile than Kalyani Investment. It trades about -0.14 of its potential returns per unit of risk. Kalyani Investment is currently generating about -0.28 per unit of risk. If you would invest  270,575  in Power Mech Projects on September 25, 2024 and sell it today you would lose (18,290) from holding Power Mech Projects or give up 6.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Power Mech Projects  vs.  Kalyani Investment

Power Mech Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Mech Projects 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kalyani Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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.

Pair Trading with Power Mech and Kalyani Investment

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

The idea behind Power Mech Projects and Kalyani Investment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.