Correlation Between Vibhor Steel and Kalyani Investment

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

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

Diversification Opportunities for Vibhor Steel and Kalyani Investment

0.28

Correlation Coefficient

Vibhor Steel  Kalyani Investment

Modest diversification

The 3 months correlation between Vibhor and Kalyani is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vibhor Steel Tubes and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment and Vibhor Steel 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 Vibhor Steel Tubes 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 Vibhor Steel i.e., Vibhor Steel and Kalyani Investment go up and down completely randomly.

Pair Corralation between Vibhor Steel and Kalyani Investment

Assuming the 90 days trading horizon Vibhor Steel Tubes is expected to under-perform the Kalyani Investment. But the stock apears to be less risky and, when comparing its historical volatility, Vibhor Steel Tubes is 1.16 times less risky than Kalyani Investment. The stock trades about -0.08 of its potential returns per unit of risk. The Kalyani Investment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  612,885  in Kalyani Investment on October 9, 2024 and sell it today you would lose (51,480) from holding Kalyani Investment or give up 8.4% of portfolio value over 90 days.

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

Vibhor Steel Tubes  vs.  Kalyani Investment

Vibhor Steel Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhor Steel Tubes 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 basic 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.

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 comparatively stable basic indicators, Kalyani Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vibhor Steel and Kalyani Investment

The main advantage of trading using opposite Vibhor Steel and Kalyani Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vibhor Steel 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 Vibhor Steel Tubes 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.