Correlation Between Country Club and Kotak Mahindra

Can any of the company-specific risk be diversified away by investing in both Country Club and Kotak Mahindra 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 Country Club and Kotak Mahindra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Country Club Hospitality and Kotak Mahindra Bank, you can compare the effects of market volatilities on Country Club and Kotak Mahindra 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 Country Club with a short position of Kotak Mahindra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Club and Kotak Mahindra.

Diversification Opportunities for Country Club and Kotak Mahindra

0.01

Correlation Coefficient

Country Club  Kotak Mahindra

Significant diversification

The 3 months correlation between Country and Kotak is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Country Club Hospitality and Kotak Mahindra Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kotak Mahindra Bank and Country Club 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 Country Club Hospitality are associated (or correlated) with Kotak Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kotak Mahindra Bank has no effect on the direction of Country Club i.e., Country Club and Kotak Mahindra go up and down completely randomly.

Pair Corralation between Country Club and Kotak Mahindra

Assuming the 90 days trading horizon Country Club Hospitality is expected to generate 2.57 times more return on investment than Kotak Mahindra. However, Country Club is 2.57 times more volatile than Kotak Mahindra Bank. It trades about -0.03 of its potential returns per unit of risk. Kotak Mahindra Bank is currently generating about -0.12 per unit of risk. If you would invest  2,220  in Country Club Hospitality on September 21, 2024 and sell it today you would lose (190.00) from holding Country Club Hospitality or give up 8.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Country Club Hospitality  vs.  Kotak Mahindra Bank

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Kotak Mahindra Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kotak Mahindra Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Country Club and Kotak Mahindra

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

The idea behind Country Club Hospitality and Kotak Mahindra Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.