Correlation Between KIOCL and Jamna Auto

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Can any of the company-specific risk be diversified away by investing in both KIOCL and Jamna Auto 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 Jamna Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIOCL Limited and Jamna Auto Industries, you can compare the effects of market volatilities on KIOCL and Jamna Auto 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 Jamna Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and Jamna Auto.

Diversification Opportunities for KIOCL and Jamna Auto

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between KIOCL and Jamna is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Jamna Auto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamna Auto Industries 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 Jamna Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamna Auto Industries has no effect on the direction of KIOCL i.e., KIOCL and Jamna Auto go up and down completely randomly.

Pair Corralation between KIOCL and Jamna Auto

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Jamna Auto. In addition to that, KIOCL is 1.41 times more volatile than Jamna Auto Industries. It trades about -0.08 of its total potential returns per unit of risk. Jamna Auto Industries is currently generating about -0.1 per unit of volatility. If you would invest  12,041  in Jamna Auto Industries on November 28, 2024 and sell it today you would lose (4,388) from holding Jamna Auto Industries or give up 36.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

KIOCL Limited  vs.  Jamna Auto Industries

 Performance 
       Timeline  
KIOCL Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Jamna Auto Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Jamna Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

KIOCL and Jamna Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KIOCL and Jamna Auto

The main advantage of trading using opposite KIOCL and Jamna Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIOCL position performs unexpectedly, Jamna Auto 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 Jamna Auto will offset losses from the drop in Jamna Auto's long position.
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The idea behind KIOCL Limited and Jamna Auto Industries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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