Correlation Between KIOCL and Diligent Media

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

By analyzing existing cross correlation between KIOCL Limited and Diligent Media, you can compare the effects of market volatilities on KIOCL and Diligent Media 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 KIOCL with a short position of Diligent Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and Diligent Media.

Diversification Opportunities for KIOCL and Diligent Media

0.81

Correlation Coefficient

KIOCL  Diligent Media

Very poor diversification

The 3 months correlation between KIOCL and Diligent is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media and KIOCL 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 KIOCL Limited are associated (or correlated) with Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of KIOCL i.e., KIOCL and Diligent Media go up and down completely randomly.

Pair Corralation between KIOCL and Diligent Media

Assuming the 90 days trading horizon KIOCL Limited is expected to generate 1.25 times more return on investment than Diligent Media. However, KIOCL is 1.25 times more volatile than Diligent Media. It trades about -0.03 of its potential returns per unit of risk. Diligent Media is currently generating about -0.11 per unit of risk. If you would invest  41,130  in KIOCL Limited on September 2, 2024 and sell it today you would lose (3,895) from holding KIOCL Limited or give up 9.47% of portfolio value over 90 days.

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

KIOCL Limited  vs.  Diligent Media

KIOCL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Diligent Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diligent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with KIOCL and Diligent Media

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

The idea behind KIOCL Limited and Diligent Media 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.