Correlation Between Silly Monks and KIOCL

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

By analyzing existing cross correlation between Silly Monks Entertainment and KIOCL Limited, you can compare the effects of market volatilities on Silly Monks and KIOCL 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 Silly Monks with a short position of KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silly Monks and KIOCL.

Diversification Opportunities for Silly Monks and KIOCL

0.61

Correlation Coefficient

Silly Monks  KIOCL

Poor diversification

The 3 months correlation between Silly and KIOCL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Silly Monks i.e., Silly Monks and KIOCL go up and down completely randomly.

Pair Corralation between Silly Monks and KIOCL

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 0.9 times more return on investment than KIOCL. However, Silly Monks Entertainment is 1.11 times less risky than KIOCL. It trades about -0.06 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.13 per unit of risk. If you would invest  2,141  in Silly Monks Entertainment on November 20, 2024 and sell it today you would lose (292.00) from holding Silly Monks Entertainment or give up 13.64% of portfolio value over 90 days.

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

Silly Monks Entertainment  vs.  KIOCL Limited

Silly Monks Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silly Monks Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

KIOCL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Silly Monks and KIOCL

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

The idea behind Silly Monks Entertainment and KIOCL 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.