Correlation Between UTI Asset and Kilitch Drugs

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

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

Diversification Opportunities for UTI Asset and Kilitch Drugs

-0.1

Correlation Coefficient

UTI Asset  Kilitch Drugs

Good diversification

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

Pair Corralation between UTI Asset and Kilitch Drugs

Assuming the 90 days trading horizon UTI Asset Management is expected to generate 1.1 times more return on investment than Kilitch Drugs. However, UTI Asset is 1.1 times more volatile than Kilitch Drugs Limited. It trades about 0.02 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about -0.04 per unit of risk. If you would invest  123,380  in UTI Asset Management on October 1, 2024 and sell it today you would earn a total of  1,605  from holding UTI Asset Management or generate 1.3% return on investment over 90 days.

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

UTI Asset Management  vs.  Kilitch Drugs Limited

UTI Asset Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UTI Asset is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kilitch Drugs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with UTI Asset and Kilitch Drugs

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

The idea behind UTI Asset Management and Kilitch Drugs 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.