Correlation Between Ratnamani Metals and KEI Industries

Can any of the company-specific risk be diversified away by investing in both Ratnamani Metals and KEI Industries 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 Ratnamani Metals and KEI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ratnamani Metals Tubes and KEI Industries Limited, you can compare the effects of market volatilities on Ratnamani Metals and KEI Industries 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 Ratnamani Metals with a short position of KEI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratnamani Metals and KEI Industries.

Diversification Opportunities for Ratnamani Metals and KEI Industries

-0.39

Correlation Coefficient

Ratnamani Metals  KEI Industries

Very good diversification

The 3 months correlation between Ratnamani and KEI is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ratnamani Metals Tubes and KEI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEI Industries and Ratnamani Metals 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 Ratnamani Metals Tubes are associated (or correlated) with KEI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEI Industries has no effect on the direction of Ratnamani Metals i.e., Ratnamani Metals and KEI Industries go up and down completely randomly.

Pair Corralation between Ratnamani Metals and KEI Industries

Assuming the 90 days trading horizon Ratnamani Metals Tubes is expected to under-perform the KEI Industries. But the stock apears to be less risky and, when comparing its historical volatility, Ratnamani Metals Tubes is 1.37 times less risky than KEI Industries. The stock trades about -0.16 of its potential returns per unit of risk. The KEI Industries Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  469,065  in KEI Industries Limited on October 15, 2024 and sell it today you would lose (51,360) from holding KEI Industries Limited or give up 10.95% of portfolio value over 90 days.

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

Ratnamani Metals Tubes  vs.  KEI Industries Limited

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KEI Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEI Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ratnamani Metals and KEI Industries

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

The idea behind Ratnamani Metals Tubes and KEI Industries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..