Correlation Between KIOCL and GTL
Can any of the company-specific risk be diversified away by investing in both KIOCL and GTL 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 KIOCL and GTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIOCL Limited and GTL Limited, you can compare the effects of market volatilities on KIOCL and GTL 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 KIOCL with a short position of GTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and GTL.
Diversification Opportunities for KIOCL and GTL
Very weak diversification
The 3 months correlation between KIOCL and GTL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and GTL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTL Limited and KIOCL 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 KIOCL Limited are associated (or correlated) with GTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTL Limited has no effect on the direction of KIOCL i.e., KIOCL and GTL go up and down completely randomly.
Pair Corralation between KIOCL and GTL
Assuming the 90 days trading horizon KIOCL Limited is expected to generate 1.88 times more return on investment than GTL. However, KIOCL is 1.88 times more volatile than GTL Limited. It trades about 0.09 of its potential returns per unit of risk. GTL Limited is currently generating about 0.04 per unit of risk. If you would invest 34,165 in KIOCL Limited on August 31, 2024 and sell it today you would earn a total of 2,610 from holding KIOCL Limited or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
KIOCL Limited vs. GTL Limited
Performance |
| Timeline |
| KIOCL Limited |
| GTL Limited |
KIOCL and GTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIOCL and GTL
The main advantage of trading using opposite KIOCL and GTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIOCL position performs unexpectedly, GTL 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 GTL will offset losses from the drop in GTL's long position.| KIOCL vs. Hisar Metal Industries | KIOCL vs. Sonata Software Limited | KIOCL vs. Sintex Plastics Technology | KIOCL vs. Nucleus Software Exports |
| GTL vs. UTI Asset Management | GTL vs. Reliance Communications Limited | GTL vs. Melstar Information Technologies | GTL vs. Hathway Cable Datacom |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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