Correlation Between V Mart and KNR Constructions

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

By analyzing existing cross correlation between V Mart Retail Limited and KNR Constructions Limited, you can compare the effects of market volatilities on V Mart and KNR Constructions 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 V Mart with a short position of KNR Constructions. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Mart and KNR Constructions.

Diversification Opportunities for V Mart and KNR Constructions

-0.2

Correlation Coefficient

V Mart  KNR Constructions

Good diversification

The 3 months correlation between VMART and KNR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and KNR Constructions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNR Constructions and V Mart 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 V Mart Retail Limited are associated (or correlated) with KNR Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNR Constructions has no effect on the direction of V Mart i.e., V Mart and KNR Constructions go up and down completely randomly.

Pair Corralation between V Mart and KNR Constructions

Assuming the 90 days trading horizon V Mart Retail Limited is expected to under-perform the KNR Constructions. In addition to that, V Mart is 1.18 times more volatile than KNR Constructions Limited. It trades about -0.08 of its total potential returns per unit of risk. KNR Constructions Limited is currently generating about 0.18 per unit of volatility. If you would invest  29,200  in KNR Constructions Limited on October 6, 2024 and sell it today you would earn a total of  5,435  from holding KNR Constructions Limited or generate 18.61% return on investment over 90 days.

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

V Mart Retail Limited  vs.  KNR Constructions Limited

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Mart Retail Limited 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.

KNR Constructions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KNR Constructions Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, KNR Constructions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with V Mart and KNR Constructions

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

The idea behind V Mart Retail Limited and KNR Constructions 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..