Correlation Between Kaushalya Infrastructure and MRF

Can any of the company-specific risk be diversified away by investing in both Kaushalya Infrastructure and MRF 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 MRF 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 MRF Limited, you can compare the effects of market volatilities on Kaushalya Infrastructure and MRF 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 MRF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaushalya Infrastructure and MRF.

Diversification Opportunities for Kaushalya Infrastructure and MRF

0.43

Correlation Coefficient

Kaushalya Infrastructure  MRF

Very weak diversification

The 3 months correlation between Kaushalya and MRF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kaushalya Infrastructure Devel and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited 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 MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Kaushalya Infrastructure i.e., Kaushalya Infrastructure and MRF go up and down completely randomly.

Pair Corralation between Kaushalya Infrastructure and MRF

Assuming the 90 days trading horizon Kaushalya Infrastructure Development is expected to under-perform the MRF. In addition to that, Kaushalya Infrastructure is 1.69 times more volatile than MRF Limited. It trades about -0.09 of its total potential returns per unit of risk. MRF Limited is currently generating about -0.07 per unit of volatility. If you would invest  13,851,000  in MRF Limited on September 28, 2024 and sell it today you would lose (695,600) from holding MRF Limited or give up 5.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Kaushalya Infrastructure Devel  vs.  MRF Limited

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 latest unsteady performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MRF Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kaushalya Infrastructure and MRF

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

The idea behind Kaushalya Infrastructure Development and MRF Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.