Correlation Between KNR Constructions and Ami Organics

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

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

Diversification Opportunities for KNR Constructions and Ami Organics

0.04

Correlation Coefficient

KNR Constructions  Ami Organics

Significant diversification

The 3 months correlation between KNR and Ami is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited and Ami Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ami Organics Limited and KNR Constructions 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 KNR Constructions Limited are associated (or correlated) with Ami Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ami Organics Limited has no effect on the direction of KNR Constructions i.e., KNR Constructions and Ami Organics go up and down completely randomly.

Pair Corralation between KNR Constructions and Ami Organics

Assuming the 90 days trading horizon KNR Constructions Limited is expected to under-perform the Ami Organics. But the stock apears to be less risky and, when comparing its historical volatility, KNR Constructions Limited is 1.09 times less risky than Ami Organics. The stock trades about -0.01 of its potential returns per unit of risk. The Ami Organics Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  106,980  in Ami Organics Limited on April 25, 2025 and sell it today you would earn a total of  10,780  from holding Ami Organics Limited or generate 10.08% return on investment over 90 days.

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

KNR Constructions Limited  vs.  Ami Organics Limited

KNR Constructions

Risk-Adjusted Performance

Very Weak

Over the last 90 days KNR Constructions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, KNR Constructions is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ami Organics Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ami Organics Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Ami Organics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with KNR Constructions and Ami Organics

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

The idea behind KNR Constructions Limited and Ami Organics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.