Correlation Between Kaushalya Infrastructure and Lakshmi Finance

Can any of the company-specific risk be diversified away by investing in both Kaushalya Infrastructure and Lakshmi Finance 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 Kaushalya Infrastructure and Lakshmi Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaushalya Infrastructure Development and Lakshmi Finance Industrial, you can compare the effects of market volatilities on Kaushalya Infrastructure and Lakshmi Finance 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 Kaushalya Infrastructure with a short position of Lakshmi Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaushalya Infrastructure and Lakshmi Finance.

Diversification Opportunities for Kaushalya Infrastructure and Lakshmi Finance

0.28

Correlation Coefficient

Kaushalya Infrastructure  Lakshmi Finance

Modest diversification

The 3 months correlation between Kaushalya and Lakshmi is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu and Kaushalya 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 Kaushalya Infrastructure Development are associated (or correlated) with Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and Lakshmi Finance go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and Lakshmi Finance

Assuming the 90 days trading horizon Kaushalya Infrastructure Development is expected to generate 0.45 times more return on investment than Lakshmi Finance. However, Kaushalya Infrastructure Development is 2.23 times less risky than Lakshmi Finance. It trades about 0.0 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.0 per unit of risk. If you would invest  92,570  in Kaushalya Infrastructure Development on September 23, 2024 and sell it today you would lose (810.00) from holding Kaushalya Infrastructure Development or give up 0.88% of portfolio value over 90 days.

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

Kaushalya Infrastructure Devel  vs.  Lakshmi Finance Industrial

Kaushalya Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaushalya Infrastructure Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Kaushalya Infrastructure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lakshmi Finance Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakshmi Finance Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lakshmi Finance 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 Kaushalya Infrastructure and Lakshmi Finance

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

The idea behind Kaushalya Infrastructure Development and Lakshmi Finance Industrial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.