Correlation Between STEEL EXCHANGE and Kalyani Investment

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

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

Diversification Opportunities for STEEL EXCHANGE and Kalyani Investment

0.16

Correlation Coefficient

STEEL EXCHANGE  Kalyani Investment

Average diversification

The 3 months correlation between STEEL and Kalyani is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding STEEL EXCHANGE INDIA and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment and STEEL EXCHANGE 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 STEEL EXCHANGE INDIA 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 STEEL EXCHANGE i.e., STEEL EXCHANGE and Kalyani Investment go up and down completely randomly.

Pair Corralation between STEEL EXCHANGE and Kalyani Investment

Assuming the 90 days trading horizon STEEL EXCHANGE INDIA is expected to under-perform the Kalyani Investment. But the stock apears to be less risky and, when comparing its historical volatility, STEEL EXCHANGE INDIA is 1.38 times less risky than Kalyani Investment. The stock trades about -0.06 of its potential returns per unit of risk. The Kalyani Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  379,615  in Kalyani Investment on October 12, 2024 and sell it today you would earn a total of  166,235  from holding Kalyani Investment or generate 43.79% return on investment over 90 days.

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

STEEL EXCHANGE INDIA  vs.  Kalyani Investment

STEEL EXCHANGE INDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STEEL EXCHANGE INDIA 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 forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unfluctuating 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 STEEL EXCHANGE and Kalyani Investment

The main advantage of trading using opposite STEEL EXCHANGE and Kalyani Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL EXCHANGE 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 STEEL EXCHANGE INDIA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.