Correlation Between Walker Dunlop and Radico Khaitan

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

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

Diversification Opportunities for Walker Dunlop and Radico Khaitan

0.24

Correlation Coefficient

Walker Dunlop  Radico Khaitan

Modest diversification

The 3 months correlation between Walker and Radico is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Radico Khaitan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radico Khaitan and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Radico Khaitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radico Khaitan has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Radico Khaitan go up and down completely randomly.

Pair Corralation between Walker Dunlop and Radico Khaitan

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.93 times less return on investment than Radico Khaitan. But when comparing it to its historical volatility, Walker Dunlop is 1.4 times less risky than Radico Khaitan. It trades about 0.06 of its potential returns per unit of risk. Radico Khaitan Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  197,500  in Radico Khaitan Limited on September 8, 2024 and sell it today you would earn a total of  36,435  from holding Radico Khaitan Limited or generate 18.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Walker Dunlop  vs.  Radico Khaitan Limited

Walker Dunlop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Radico Khaitan

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radico Khaitan Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal forward indicators, Radico Khaitan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Radico Khaitan

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

The idea behind Walker Dunlop and Radico Khaitan 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.