Correlation Between POWERGRID Infrastructure and Kanoria Chemicals
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By analyzing existing cross correlation between POWERGRID Infrastructure Investment and Kanoria Chemicals Industries, you can compare the effects of market volatilities on POWERGRID Infrastructure and Kanoria 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 POWERGRID Infrastructure with a short position of Kanoria Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and Kanoria Chemicals.
Diversification Opportunities for POWERGRID Infrastructure and Kanoria Chemicals
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between POWERGRID and Kanoria is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Kanoria Chemicals Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kanoria Chemicals and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Kanoria Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kanoria Chemicals has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Kanoria Chemicals go up and down completely randomly.
Pair Corralation between POWERGRID Infrastructure and Kanoria Chemicals
Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to generate 0.37 times more return on investment than Kanoria Chemicals. However, POWERGRID Infrastructure Investment is 2.73 times less risky than Kanoria Chemicals. It trades about -0.23 of its potential returns per unit of risk. Kanoria Chemicals Industries is currently generating about -0.1 per unit of risk. If you would invest 9,047 in POWERGRID Infrastructure Investment on September 1, 2024 and sell it today you would lose (385.00) from holding POWERGRID Infrastructure Investment or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
POWERGRID Infrastructure Inves vs. Kanoria Chemicals Industries
Performance |
| Timeline |
| POWERGRID Infrastructure |
| Kanoria Chemicals |
POWERGRID Infrastructure and Kanoria Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWERGRID Infrastructure and Kanoria Chemicals
The main advantage of trading using opposite POWERGRID Infrastructure and Kanoria Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWERGRID Infrastructure position performs unexpectedly, Kanoria 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 Kanoria Chemicals will offset losses from the drop in Kanoria Chemicals' long position.The idea behind POWERGRID Infrastructure Investment and Kanoria Chemicals Industries 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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