Correlation Between Karur Vysya and V2 Retail

Can any of the company-specific risk be diversified away by investing in both Karur Vysya and V2 Retail 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 Karur Vysya and V2 Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karur Vysya Bank and V2 Retail Limited, you can compare the effects of market volatilities on Karur Vysya and V2 Retail 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 Karur Vysya with a short position of V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karur Vysya and V2 Retail.

Diversification Opportunities for Karur Vysya and V2 Retail

0.59

Correlation Coefficient

Karur Vysya  V2 Retail

Very weak diversification

The 3 months correlation between Karur and V2RETAIL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Karur Vysya Bank and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail Limited and Karur Vysya 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 Karur Vysya Bank are associated (or correlated) with V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of Karur Vysya i.e., Karur Vysya and V2 Retail go up and down completely randomly.

Pair Corralation between Karur Vysya and V2 Retail

Assuming the 90 days trading horizon Karur Vysya Bank is expected to generate 0.75 times more return on investment than V2 Retail. However, Karur Vysya Bank is 1.33 times less risky than V2 Retail. It trades about 0.21 of its potential returns per unit of risk. V2 Retail Limited is currently generating about 0.03 per unit of risk. If you would invest  21,620  in Karur Vysya Bank on April 25, 2025 and sell it today you would earn a total of  5,510  from holding Karur Vysya Bank or generate 25.49% return on investment over 90 days.

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

Karur Vysya Bank  vs.  V2 Retail Limited

Karur Vysya Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Karur Vysya Bank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Karur Vysya showed solid returns over the last few months and may actually be approaching a breakup point.

V2 Retail Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, V2 Retail is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Karur Vysya and V2 Retail

The main advantage of trading using opposite Karur Vysya and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karur Vysya position performs unexpectedly, V2 Retail 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind Karur Vysya Bank and V2 Retail 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.