Correlation Between KIOCL and VIP Clothing

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

Diversification Opportunities for KIOCL and VIP Clothing

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KIOCL and VIP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and VIP Clothing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIP Clothing 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 VIP Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIP Clothing Limited has no effect on the direction of KIOCL i.e., KIOCL and VIP Clothing go up and down completely randomly.

Pair Corralation between KIOCL and VIP Clothing

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the VIP Clothing. But the stock apears to be less risky and, when comparing its historical volatility, KIOCL Limited is 1.41 times less risky than VIP Clothing. The stock trades about -0.08 of its potential returns per unit of risk. The VIP Clothing Limited is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  3,931  in VIP Clothing Limited on September 13, 2024 and sell it today you would earn a total of  1,269  from holding VIP Clothing Limited or generate 32.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KIOCL Limited  vs.  VIP Clothing Limited

 Performance 
       Timeline  
KIOCL Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, KIOCL is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
VIP Clothing Limited 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VIP Clothing Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, VIP Clothing unveiled solid returns over the last few months and may actually be approaching a breakup point.

KIOCL and VIP Clothing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KIOCL and VIP Clothing

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

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