Correlation Between Credo Brands and KIOCL

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

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

Diversification Opportunities for Credo Brands and KIOCL

0.66

Correlation Coefficient

Credo Brands  KIOCL

Poor diversification

The 3 months correlation between Credo and KIOCL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Credo Brands Marketing and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL Limited and Credo Brands 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 Credo Brands Marketing are associated (or correlated) with KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Credo Brands i.e., Credo Brands and KIOCL go up and down completely randomly.

Pair Corralation between Credo Brands and KIOCL

Assuming the 90 days trading horizon Credo Brands Marketing is expected to generate 0.95 times more return on investment than KIOCL. However, Credo Brands Marketing is 1.05 times less risky than KIOCL. It trades about 0.0 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.01 per unit of risk. If you would invest  21,265  in Credo Brands Marketing on September 13, 2024 and sell it today you would lose (853.00) from holding Credo Brands Marketing or give up 4.01% of portfolio value over 90 days.

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

Credo Brands Marketing  vs.  KIOCL Limited

Credo Brands Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Credo Brands and KIOCL

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

The idea behind Credo Brands Marketing and KIOCL 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.