Correlation Between Indian Metals and Kewal Kiran
Can any of the company-specific risk be diversified away by investing in both Indian Metals and Kewal Kiran 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 Indian Metals and Kewal Kiran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Metals Ferro and Kewal Kiran Clothing, you can compare the effects of market volatilities on Indian Metals and Kewal Kiran 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 Indian Metals with a short position of Kewal Kiran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and Kewal Kiran.
Diversification Opportunities for Indian Metals and Kewal Kiran
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indian and Kewal is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Indian Metals i.e., Indian Metals and Kewal Kiran go up and down completely randomly.
Pair Corralation between Indian Metals and Kewal Kiran
Assuming the 90 days trading horizon Indian Metals Ferro is expected to generate 1.51 times more return on investment than Kewal Kiran. However, Indian Metals is 1.51 times more volatile than Kewal Kiran Clothing. It trades about 0.13 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about -0.16 per unit of risk. If you would invest 70,542 in Indian Metals Ferro on October 14, 2024 and sell it today you would earn a total of 16,268 from holding Indian Metals Ferro or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Indian Metals Ferro vs. Kewal Kiran Clothing
Performance |
| Timeline |
| Indian Metals Ferro |
| Kewal Kiran Clothing |
Indian Metals and Kewal Kiran Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Metals and Kewal Kiran
The main advantage of trading using opposite Indian Metals and Kewal Kiran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Metals position performs unexpectedly, Kewal Kiran 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 Kewal Kiran will offset losses from the drop in Kewal Kiran's long position.| Indian Metals vs. Sintex Plastics Technology | Indian Metals vs. Vibhor Steel Tubes | Indian Metals vs. Mahamaya Steel Industries | Indian Metals vs. Kalyani Steels Limited |
| Kewal Kiran vs. Shyam Metalics and | Kewal Kiran vs. Hindustan Copper Limited | Kewal Kiran vs. Indian Metals Ferro | Kewal Kiran vs. Lakshmi Finance Industrial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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