Correlation Between Kothari Petrochemicals and Thirumalai Chemicals
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By analyzing existing cross correlation between Kothari Petrochemicals Limited and Thirumalai Chemicals Limited, you can compare the effects of market volatilities on Kothari Petrochemicals and Thirumalai Chemicals 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 Kothari Petrochemicals with a short position of Thirumalai Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kothari Petrochemicals and Thirumalai Chemicals.
Diversification Opportunities for Kothari Petrochemicals and Thirumalai Chemicals
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kothari and Thirumalai is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Kothari Petrochemicals Limited and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai Chemicals and Kothari Petrochemicals 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 Kothari Petrochemicals Limited are associated (or correlated) with Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Kothari Petrochemicals i.e., Kothari Petrochemicals and Thirumalai Chemicals go up and down completely randomly.
Pair Corralation between Kothari Petrochemicals and Thirumalai Chemicals
Assuming the 90 days trading horizon Kothari Petrochemicals Limited is expected to under-perform the Thirumalai Chemicals. In addition to that, Kothari Petrochemicals is 1.22 times more volatile than Thirumalai Chemicals Limited. It trades about -0.12 of its total potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about -0.09 per unit of volatility. If you would invest 25,981 in Thirumalai Chemicals Limited on December 8, 2024 and sell it today you would lose (1,826) from holding Thirumalai Chemicals Limited or give up 7.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kothari Petrochemicals Limited vs. Thirumalai Chemicals Limited
Performance |
| Timeline |
| Kothari Petrochemicals |
| Thirumalai Chemicals |
Kothari Petrochemicals and Thirumalai Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kothari Petrochemicals and Thirumalai Chemicals
The main advantage of trading using opposite Kothari Petrochemicals and Thirumalai Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kothari Petrochemicals position performs unexpectedly, Thirumalai Chemicals 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 Thirumalai Chemicals will offset losses from the drop in Thirumalai Chemicals' long position.The idea behind Kothari Petrochemicals Limited and Thirumalai Chemicals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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