Correlation Between KEC International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KEC International and Dow Jones 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 KEC International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEC International Limited and Dow Jones Industrial, you can compare the effects of market volatilities on KEC International and Dow Jones 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 KEC International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEC International and Dow Jones.
Diversification Opportunities for KEC International and Dow Jones
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KEC and Dow is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KEC International Limited and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and KEC International 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 KEC International Limited are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of KEC International i.e., KEC International and Dow Jones go up and down completely randomly.
Pair Corralation between KEC International and Dow Jones
Assuming the 90 days trading horizon KEC International Limited is expected to generate 2.88 times more return on investment than Dow Jones. However, KEC International is 2.88 times more volatile than Dow Jones Industrial. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 90,450 in KEC International Limited on August 27, 2024 and sell it today you would earn a total of 9,470 from holding KEC International Limited or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
KEC International Limited vs. Dow Jones Industrial
Performance |
| Timeline |
KEC International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KEC International Limited
Pair trading matchups for KEC International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KEC International and Dow Jones
The main advantage of trading using opposite KEC International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEC International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| KEC International vs. Pritish Nandy Communications | KEC International vs. Hybrid Financial Services | KEC International vs. One 97 Communications | KEC International vs. State Bank of |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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