Correlation Between Zuari Agro and Kaynes Technology

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

By analyzing existing cross correlation between Zuari Agro Chemicals and Kaynes Technology India, you can compare the effects of market volatilities on Zuari Agro and Kaynes Technology 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 Zuari Agro with a short position of Kaynes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zuari Agro and Kaynes Technology.

Diversification Opportunities for Zuari Agro and Kaynes Technology

0.76

Correlation Coefficient

Zuari Agro  Kaynes Technology

Poor diversification

The 3 months correlation between Zuari and Kaynes is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zuari Agro Chemicals and Kaynes Technology India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaynes Technology India and Zuari Agro 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 Zuari Agro Chemicals are associated (or correlated) with Kaynes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaynes Technology India has no effect on the direction of Zuari Agro i.e., Zuari Agro and Kaynes Technology go up and down completely randomly.

Pair Corralation between Zuari Agro and Kaynes Technology

Assuming the 90 days trading horizon Zuari Agro Chemicals is expected to generate 0.73 times more return on investment than Kaynes Technology. However, Zuari Agro Chemicals is 1.38 times less risky than Kaynes Technology. It trades about -0.06 of its potential returns per unit of risk. Kaynes Technology India is currently generating about -0.13 per unit of risk. If you would invest  22,263  in Zuari Agro Chemicals on December 24, 2024 and sell it today you would lose (2,865) from holding Zuari Agro Chemicals or give up 12.87% of portfolio value over 90 days.

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

Zuari Agro Chemicals  vs.  Kaynes Technology India

Zuari Agro Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zuari Agro Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zuari Agro and Kaynes Technology

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

The idea behind Zuari Agro Chemicals and Kaynes Technology India 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.