Correlation Between ADF Foods and DiGiSPICE Technologies

Can any of the company-specific risk be diversified away by investing in both ADF Foods and DiGiSPICE Technologies 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 ADF Foods and DiGiSPICE Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ADF Foods and DiGiSPICE Technologies

-0.28

Correlation Coefficient

ADF Foods  DiGiSPICE Technologies

Very good diversification

The 3 months correlation between ADF and DiGiSPICE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and DiGiSPICE Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiGiSPICE Technologies and ADF Foods 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 ADF Foods Limited are associated (or correlated) with DiGiSPICE Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiGiSPICE Technologies has no effect on the direction of ADF Foods i.e., ADF Foods and DiGiSPICE Technologies go up and down completely randomly.

Pair Corralation between ADF Foods and DiGiSPICE Technologies

Assuming the 90 days trading horizon ADF Foods is expected to generate 6.44 times less return on investment than DiGiSPICE Technologies. But when comparing it to its historical volatility, ADF Foods Limited is 1.02 times less risky than DiGiSPICE Technologies. It trades about 0.05 of its potential returns per unit of risk. DiGiSPICE Technologies Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,610  in DiGiSPICE Technologies Limited on September 26, 2024 and sell it today you would earn a total of  443.00  from holding DiGiSPICE Technologies Limited or generate 16.97% return on investment over 90 days.

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

ADF Foods Limited  vs.  DiGiSPICE Technologies Limited

ADF Foods Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Foods Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ADF Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ADF Foods and DiGiSPICE Technologies

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

The idea behind ADF Foods Limited and DiGiSPICE Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.