Correlation Between Shipping and Karur Vysya

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

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

Diversification Opportunities for Shipping and Karur Vysya

-0.1

Correlation Coefficient

Shipping  Karur Vysya

Good diversification

The 3 months correlation between Shipping and Karur is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shipping and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank and Shipping 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 Shipping are associated (or correlated) with Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of Shipping i.e., Shipping and Karur Vysya go up and down completely randomly.

Pair Corralation between Shipping and Karur Vysya

Assuming the 90 days trading horizon Shipping is expected to under-perform the Karur Vysya. In addition to that, Shipping is 1.45 times more volatile than Karur Vysya Bank. It trades about -0.06 of its total potential returns per unit of risk. Karur Vysya Bank is currently generating about 0.07 per unit of volatility. If you would invest  21,940  in Karur Vysya Bank on September 4, 2024 and sell it today you would earn a total of  1,809  from holding Karur Vysya Bank or generate 8.25% return on investment over 90 days.

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

Shipping  vs.  Karur Vysya Bank

Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Karur Vysya Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Karur Vysya may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shipping and Karur Vysya

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

The idea behind Shipping and Karur Vysya Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.