Correlation Between Kanoria Chemicals and Karur Vysya

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

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

Diversification Opportunities for Kanoria Chemicals and Karur Vysya

0.75

Correlation Coefficient

Kanoria Chemicals  Karur Vysya

Poor diversification

The 3 months correlation between Kanoria and Karur is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kanoria Chemicals Industries 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 Kanoria Chemicals 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 Kanoria Chemicals Industries 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 Kanoria Chemicals i.e., Kanoria Chemicals and Karur Vysya go up and down completely randomly.

Pair Corralation between Kanoria Chemicals and Karur Vysya

Assuming the 90 days trading horizon Kanoria Chemicals Industries is expected to generate 1.19 times more return on investment than Karur Vysya. However, Kanoria Chemicals is 1.19 times more volatile than Karur Vysya Bank. It trades about 0.14 of its potential returns per unit of risk. Karur Vysya Bank is currently generating about 0.16 per unit of risk. If you would invest  7,900  in Kanoria Chemicals Industries on April 1, 2025 and sell it today you would earn a total of  1,659  from holding Kanoria Chemicals Industries or generate 21.0% return on investment over 90 days.

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

Kanoria Chemicals Industries  vs.  Karur Vysya Bank

Kanoria Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kanoria Chemicals Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Kanoria Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Karur Vysya Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Karur Vysya showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kanoria Chemicals and Karur Vysya

The main advantage of trading using opposite Kanoria Chemicals and Karur Vysya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kanoria Chemicals 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 Kanoria Chemicals Industries 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.