Correlation Between Oil Natural and KIOCL
Can any of the company-specific risk be diversified away by investing in both Oil Natural and KIOCL 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 Oil Natural and KIOCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Natural Gas and KIOCL Limited, you can compare the effects of market volatilities on Oil Natural and KIOCL 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 Oil Natural with a short position of KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and KIOCL.
Diversification Opportunities for Oil Natural and KIOCL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and KIOCL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Oil Natural 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 Oil Natural Gas are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Oil Natural i.e., Oil Natural and KIOCL go up and down completely randomly.
Pair Corralation between Oil Natural and KIOCL
Assuming the 90 days trading horizon Oil Natural is expected to generate 1.06 times less return on investment than KIOCL. But when comparing it to its historical volatility, Oil Natural Gas is 1.84 times less risky than KIOCL. It trades about 0.08 of its potential returns per unit of risk. KIOCL Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21,395 in KIOCL Limited on August 28, 2024 and sell it today you would earn a total of 13,475 from holding KIOCL Limited or generate 62.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Oil Natural Gas vs. KIOCL Limited
Performance |
| Timeline |
| Oil Natural Gas |
| KIOCL Limited |
Oil Natural and KIOCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Natural and KIOCL
The main advantage of trading using opposite Oil Natural and KIOCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural position performs unexpectedly, KIOCL 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 KIOCL will offset losses from the drop in KIOCL's long position.| Oil Natural vs. Digjam Limited | Oil Natural vs. Gujarat Raffia Industries | Oil Natural vs. Avonmore Capital Management | Oil Natural vs. JSW Holdings Limited |
| KIOCL vs. Embassy Office Parks | KIOCL vs. Gujarat Narmada Valley | KIOCL vs. Gujarat Alkalies and | KIOCL vs. JTL Industries |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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