Correlation Between Gunkul Engineering and Kingsmen CMTI

Can any of the company-specific risk be diversified away by investing in both Gunkul Engineering and Kingsmen CMTI 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 Gunkul Engineering and Kingsmen CMTI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunkul Engineering Public and Kingsmen CMTI Public, you can compare the effects of market volatilities on Gunkul Engineering and Kingsmen CMTI 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 Gunkul Engineering with a short position of Kingsmen CMTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunkul Engineering and Kingsmen CMTI.

Diversification Opportunities for Gunkul Engineering and Kingsmen CMTI

0.83

Correlation Coefficient

Gunkul Engineering  Kingsmen CMTI

Very poor diversification

The 3 months correlation between Gunkul and Kingsmen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gunkul Engineering Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and Gunkul Engineering 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 Gunkul Engineering Public are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of Gunkul Engineering i.e., Gunkul Engineering and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between Gunkul Engineering and Kingsmen CMTI

Assuming the 90 days trading horizon Gunkul Engineering Public is expected to under-perform the Kingsmen CMTI. But the stock apears to be less risky and, when comparing its historical volatility, Gunkul Engineering Public is 28.8 times less risky than Kingsmen CMTI. The stock trades about -0.01 of its potential returns per unit of risk. The Kingsmen CMTI Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Kingsmen CMTI Public on September 14, 2024 and sell it today you would earn a total of  22.00  from holding Kingsmen CMTI Public or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.62%
Values	Daily Returns

Gunkul Engineering Public  vs.  Kingsmen CMTI Public

Gunkul Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunkul Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsmen CMTI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Gunkul Engineering and Kingsmen CMTI

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

The idea behind Gunkul Engineering Public and Kingsmen CMTI Public 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.