Correlation Between Tata Consultancy and Keynote Financial

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

By analyzing existing cross correlation between Tata Consultancy Services and Keynote Financial Services, you can compare the effects of market volatilities on Tata Consultancy and Keynote Financial 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 Tata Consultancy with a short position of Keynote Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tata Consultancy and Keynote Financial.

Diversification Opportunities for Tata Consultancy and Keynote Financial

-0.08

Correlation Coefficient

Tata Consultancy  Keynote Financial

Good diversification

The 3 months correlation between Tata and Keynote is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tata Consultancy Services and Keynote Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keynote Financial and Tata Consultancy 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 Tata Consultancy Services are associated (or correlated) with Keynote Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keynote Financial has no effect on the direction of Tata Consultancy i.e., Tata Consultancy and Keynote Financial go up and down completely randomly.

Pair Corralation between Tata Consultancy and Keynote Financial

Assuming the 90 days trading horizon Tata Consultancy Services is expected to generate 0.73 times more return on investment than Keynote Financial. However, Tata Consultancy Services is 1.38 times less risky than Keynote Financial. It trades about 0.04 of its potential returns per unit of risk. Keynote Financial Services is currently generating about -0.32 per unit of risk. If you would invest  412,658  in Tata Consultancy Services on October 12, 2024 and sell it today you would earn a total of  13,907  from holding Tata Consultancy Services or generate 3.37% return on investment over 90 days.

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

Tata Consultancy Services  vs.  Keynote Financial Services

Tata Consultancy Services

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Consultancy Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tata Consultancy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Keynote Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keynote Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Tata Consultancy and Keynote Financial

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

The idea behind Tata Consultancy Services and Keynote Financial Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.