Correlation Between Agarwal Industrial and Kewal Kiran

Can any of the company-specific risk be diversified away by investing in both Agarwal Industrial and Kewal Kiran 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 Agarwal Industrial and Kewal Kiran into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agarwal Industrial and Kewal Kiran Clothing, you can compare the effects of market volatilities on Agarwal Industrial and Kewal Kiran 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 Agarwal Industrial with a short position of Kewal Kiran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agarwal Industrial and Kewal Kiran.

Diversification Opportunities for Agarwal Industrial and Kewal Kiran

0.34

Correlation Coefficient

Agarwal Industrial  Kewal Kiran

Weak diversification

The 3 months correlation between Agarwal and Kewal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and Agarwal Industrial 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 Agarwal Industrial are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Kewal Kiran go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Kewal Kiran

Assuming the 90 days trading horizon Agarwal Industrial is expected to under-perform the Kewal Kiran. In addition to that, Agarwal Industrial is 1.55 times more volatile than Kewal Kiran Clothing. It trades about -0.01 of its total potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.03 per unit of volatility. If you would invest  61,830  in Kewal Kiran Clothing on September 3, 2024 and sell it today you would earn a total of  1,360  from holding Kewal Kiran Clothing or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agarwal Industrial  vs.  Kewal Kiran Clothing

Agarwal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kewal Kiran Clothing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kewal Kiran Clothing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kewal Kiran is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Agarwal Industrial and Kewal Kiran

The main advantage of trading using opposite Agarwal Industrial and Kewal Kiran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agarwal Industrial position performs unexpectedly, Kewal Kiran 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 Kewal Kiran will offset losses from the drop in Kewal Kiran's long position.

The idea behind Agarwal Industrial and Kewal Kiran Clothing 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..