Correlation Between Consolidated Construction and KNR Constructions

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

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

Diversification Opportunities for Consolidated Construction and KNR Constructions

0.29

Correlation Coefficient

Consolidated Construction  KNR Constructions

Modest diversification

The 3 months correlation between Consolidated and KNR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and KNR Constructions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNR Constructions and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with KNR Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNR Constructions has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and KNR Constructions go up and down completely randomly.

Pair Corralation between Consolidated Construction and KNR Constructions

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 1.83 times more return on investment than KNR Constructions. However, Consolidated Construction is 1.83 times more volatile than KNR Constructions Limited. It trades about 0.1 of its potential returns per unit of risk. KNR Constructions Limited is currently generating about 0.01 per unit of risk. If you would invest  1,372  in Consolidated Construction Consortium on May 6, 2025 and sell it today you would earn a total of  260.00  from holding Consolidated Construction Consortium or generate 18.95% return on investment over 90 days.

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

Consolidated Construction Cons  vs.  KNR Constructions Limited

Consolidated Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Construction Consortium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Consolidated Construction unveiled solid returns over the last few months and may actually be approaching a breakup point.

KNR Constructions

Risk-Adjusted Performance

Weak

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

Pair Trading with Consolidated Construction and KNR Constructions

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

The idea behind Consolidated Construction Consortium and KNR Constructions 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.