Correlation Between Data Agro and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both Data Agro and KSB Pumps 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 Data Agro and KSB Pumps into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data Agro and KSB Pumps, you can compare the effects of market volatilities on Data Agro and KSB Pumps 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 Data Agro with a short position of KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Agro and KSB Pumps.
Diversification Opportunities for Data Agro and KSB Pumps
Modest diversification
The 3 months correlation between Data and KSB is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Data Agro and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps and Data 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 Data Agro are associated (or correlated) with KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of Data Agro i.e., Data Agro and KSB Pumps go up and down completely randomly.
Pair Corralation between Data Agro and KSB Pumps
Assuming the 90 days trading horizon Data Agro is expected to generate 1.92 times more return on investment than KSB Pumps. However, Data Agro is 1.92 times more volatile than KSB Pumps. It trades about 0.14 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.04 per unit of risk. If you would invest 1,249 in Data Agro on August 29, 2024 and sell it today you would earn a total of 6,173 from holding Data Agro or generate 494.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 67.95% |
| Values | Daily Returns |
Data Agro vs. KSB Pumps
Performance |
| Timeline |
| Data Agro |
| KSB Pumps |
Data Agro and KSB Pumps Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data Agro and KSB Pumps
The main advantage of trading using opposite Data Agro and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Agro position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.| Data Agro vs. Masood Textile Mills | Data Agro vs. Fauji Foods | Data Agro vs. KSB Pumps | Data Agro vs. Mari Petroleum |
| KSB Pumps vs. Masood Textile Mills | KSB Pumps vs. Fauji Foods | KSB Pumps vs. Mari Petroleum | KSB Pumps vs. Loads |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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