Correlation Between Kalyani Steels and Indian Metals
Can any of the company-specific risk be diversified away by investing in both Kalyani Steels and Indian Metals 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 Kalyani Steels and Indian Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kalyani Steels Limited and Indian Metals Ferro, you can compare the effects of market volatilities on Kalyani Steels and Indian Metals 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 Kalyani Steels with a short position of Indian Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalyani Steels and Indian Metals.
Diversification Opportunities for Kalyani Steels and Indian Metals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kalyani and Indian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels Limited and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro and Kalyani Steels 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 Kalyani Steels Limited are associated (or correlated) with Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of Kalyani Steels i.e., Kalyani Steels and Indian Metals go up and down completely randomly.
Pair Corralation between Kalyani Steels and Indian Metals
Assuming the 90 days trading horizon Kalyani Steels Limited is expected to under-perform the Indian Metals. But the stock apears to be less risky and, when comparing its historical volatility, Kalyani Steels Limited is 1.13 times less risky than Indian Metals. The stock trades about -0.38 of its potential returns per unit of risk. The Indian Metals Ferro is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 83,295 in Indian Metals Ferro on October 29, 2024 and sell it today you would earn a total of 1,435 from holding Indian Metals Ferro or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kalyani Steels Limited vs. Indian Metals Ferro
Performance |
| Timeline |
| Kalyani Steels |
| Indian Metals Ferro |
Kalyani Steels and Indian Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kalyani Steels and Indian Metals
The main advantage of trading using opposite Kalyani Steels and Indian Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalyani Steels position performs unexpectedly, Indian Metals 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 Indian Metals will offset losses from the drop in Indian Metals' long position.| Kalyani Steels vs. GPT Healthcare | Kalyani Steels vs. Univa Foods Limited | Kalyani Steels vs. Zota Health Care | Kalyani Steels vs. LT Foods Limited |
| Indian Metals vs. Patanjali Foods Limited | Indian Metals vs. Transport of | Indian Metals vs. Kohinoor Foods Limited | Indian Metals vs. Sapphire Foods 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 Correlations module to find global opportunities by holding instruments from different markets.
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