Correlation Between KNR Constructions and Diligent Media

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

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

Diversification Opportunities for KNR Constructions and Diligent Media

0.64

Correlation Coefficient

KNR Constructions  Diligent Media

Poor diversification

The 3 months correlation between KNR and Diligent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media and KNR Constructions 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 KNR Constructions 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 KNR Constructions i.e., KNR Constructions and Diligent Media go up and down completely randomly.

Pair Corralation between KNR Constructions and Diligent Media

Assuming the 90 days trading horizon KNR Constructions Limited is expected to generate 0.89 times more return on investment than Diligent Media. However, KNR Constructions Limited is 1.12 times less risky than Diligent Media. It trades about 0.0 of its potential returns per unit of risk. Diligent Media is currently generating about -0.1 per unit of risk. If you would invest  33,316  in KNR Constructions Limited on September 3, 2024 and sell it today you would lose (636.00) from holding KNR Constructions Limited or give up 1.91% of portfolio value over 90 days.

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

KNR Constructions Limited  vs.  Diligent Media

KNR Constructions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KNR Constructions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, KNR Constructions is not utilizing all of its potentials. The latest stock price disturbance, 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 KNR Constructions and Diligent Media

The main advantage of trading using opposite KNR Constructions and Diligent Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNR Constructions 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 KNR Constructions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.