Correlation Between Hilton Metal and Kavveri Telecom

Can any of the company-specific risk be diversified away by investing in both Hilton Metal and Kavveri Telecom 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 Hilton Metal and Kavveri Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hilton Metal Forging and Kavveri Telecom Products, you can compare the effects of market volatilities on Hilton Metal and Kavveri Telecom 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 Hilton Metal with a short position of Kavveri Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Kavveri Telecom.

Diversification Opportunities for Hilton Metal and Kavveri Telecom

-0.2

Correlation Coefficient

Hilton Metal  Kavveri Telecom

Good diversification

The 3 months correlation between Hilton and Kavveri is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Kavveri Telecom Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavveri Telecom Products and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Kavveri Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavveri Telecom Products has no effect on the direction of Hilton Metal i.e., Hilton Metal and Kavveri Telecom go up and down completely randomly.

Pair Corralation between Hilton Metal and Kavveri Telecom

Assuming the 90 days trading horizon Hilton Metal Forging is expected to generate 0.51 times more return on investment than Kavveri Telecom. However, Hilton Metal Forging is 1.94 times less risky than Kavveri Telecom. It trades about -0.19 of its potential returns per unit of risk. Kavveri Telecom Products is currently generating about -0.33 per unit of risk. If you would invest  9,002  in Hilton Metal Forging on September 1, 2024 and sell it today you would lose (689.00) from holding Hilton Metal Forging or give up 7.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hilton Metal Forging  vs.  Kavveri Telecom Products

Hilton Metal Forging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hilton Metal Forging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

Kavveri Telecom Products

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kavveri Telecom Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Kavveri Telecom may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hilton Metal and Kavveri Telecom

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

The idea behind Hilton Metal Forging and Kavveri Telecom Products 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.