Correlation Between Indian Metals and Kilitch Drugs

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

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

Diversification Opportunities for Indian Metals and Kilitch Drugs

0.44

Correlation Coefficient

Indian Metals  Kilitch Drugs

Very weak diversification

The 3 months correlation between Indian and Kilitch is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro 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 Indian Metals 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 Indian Metals Ferro 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 Indian Metals i.e., Indian Metals and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Indian Metals and Kilitch Drugs

Assuming the 90 days trading horizon Indian Metals is expected to generate 1.32 times less return on investment than Kilitch Drugs. But when comparing it to its historical volatility, Indian Metals Ferro is 1.4 times less risky than Kilitch Drugs. It trades about 0.14 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  34,535  in Kilitch Drugs Limited on April 25, 2025 and sell it today you would earn a total of  9,030  from holding Kilitch Drugs Limited or generate 26.15% return on investment over 90 days.

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

Indian Metals Ferro  vs.  Kilitch Drugs Limited

Indian Metals Ferro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kilitch Drugs Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Kilitch Drugs demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Metals and Kilitch Drugs

The main advantage of trading using opposite Indian Metals and Kilitch Drugs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Metals 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 Indian Metals Ferro 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.