Correlation Between Kewal Kiran and HEG
Can any of the company-specific risk be diversified away by investing in both Kewal Kiran and HEG 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 Kewal Kiran and HEG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kewal Kiran Clothing and HEG Limited, you can compare the effects of market volatilities on Kewal Kiran and HEG 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 Kewal Kiran with a short position of HEG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kewal Kiran and HEG.
Diversification Opportunities for Kewal Kiran and HEG
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kewal and HEG is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kewal Kiran Clothing and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited and Kewal Kiran 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 Kewal Kiran Clothing are associated (or correlated) with HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Kewal Kiran i.e., Kewal Kiran and HEG go up and down completely randomly.
Pair Corralation between Kewal Kiran and HEG
Assuming the 90 days trading horizon Kewal Kiran Clothing is expected to generate 0.72 times more return on investment than HEG. However, Kewal Kiran Clothing is 1.4 times less risky than HEG. It trades about -0.18 of its potential returns per unit of risk. HEG Limited is currently generating about -0.34 per unit of risk. If you would invest 61,850 in Kewal Kiran Clothing on October 10, 2024 and sell it today you would lose (5,265) from holding Kewal Kiran Clothing or give up 8.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kewal Kiran Clothing vs. HEG Limited
Performance |
| Timeline |
| Kewal Kiran Clothing |
| HEG Limited |
Kewal Kiran and HEG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kewal Kiran and HEG
The main advantage of trading using opposite Kewal Kiran and HEG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kewal Kiran position performs unexpectedly, HEG 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 HEG will offset losses from the drop in HEG's long position.| Kewal Kiran vs. Compucom Software Limited | Kewal Kiran vs. Kaynes Technology India | Kewal Kiran vs. One 97 Communications | Kewal Kiran vs. Jindal Drilling And |
| HEG vs. Electrosteel Castings Limited | HEG vs. Electronics Mart India | HEG vs. Cartrade Tech Limited | HEG vs. Cantabil Retail India |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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