Correlation Between Trent and Kewal Kiran

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

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

Diversification Opportunities for Trent and Kewal Kiran

0.82

Correlation Coefficient

Trent  Kewal Kiran

Very poor diversification

The 3 months correlation between Trent and Kewal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Trent Limited and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and Trent 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 Trent Limited are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Trent i.e., Trent and Kewal Kiran go up and down completely randomly.

Pair Corralation between Trent and Kewal Kiran

Assuming the 90 days trading horizon Trent Limited is expected to under-perform the Kewal Kiran. In addition to that, Trent is 1.15 times more volatile than Kewal Kiran Clothing. It trades about -0.14 of its total potential returns per unit of risk. Kewal Kiran Clothing is currently generating about -0.14 per unit of volatility. If you would invest  57,825  in Kewal Kiran Clothing on December 30, 2024 and sell it today you would lose (11,800) from holding Kewal Kiran Clothing or give up 20.41% of portfolio value over 90 days.

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

Trent Limited  vs.  Kewal Kiran Clothing

Trent Limited

Risk-Adjusted Performance

Very Weak

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

Kewal Kiran Clothing

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Trent and Kewal Kiran

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

The idea behind Trent Limited and Kewal Kiran Clothing 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.