Correlation Between Styrenix Performance and KNR Constructions

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

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

Diversification Opportunities for Styrenix Performance and KNR Constructions

0.49

Correlation Coefficient

Styrenix Performance  KNR Constructions

Very weak diversification

The 3 months correlation between Styrenix and KNR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Styrenix Performance Materials and KNR Constructions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNR Constructions and Styrenix Performance 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 Styrenix Performance Materials are associated (or correlated) with KNR Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNR Constructions has no effect on the direction of Styrenix Performance i.e., Styrenix Performance and KNR Constructions go up and down completely randomly.

Pair Corralation between Styrenix Performance and KNR Constructions

Assuming the 90 days trading horizon Styrenix Performance Materials is expected to generate 0.97 times more return on investment than KNR Constructions. However, Styrenix Performance Materials is 1.03 times less risky than KNR Constructions. It trades about 0.2 of its potential returns per unit of risk. KNR Constructions Limited is currently generating about 0.06 per unit of risk. If you would invest  230,923  in Styrenix Performance Materials on September 19, 2024 and sell it today you would earn a total of  72,932  from holding Styrenix Performance Materials or generate 31.58% return on investment over 90 days.

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

Styrenix Performance Materials  vs.  KNR Constructions Limited

Styrenix Performance

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KNR Constructions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KNR Constructions Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, KNR Constructions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Styrenix Performance and KNR Constructions

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

The idea behind Styrenix Performance Materials and KNR Constructions 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.