Correlation Between ADF Foods and Gokul Refoils

Can any of the company-specific risk be diversified away by investing in both ADF Foods and Gokul Refoils 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 Gokul Refoils 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 Gokul Refoils and, you can compare the effects of market volatilities on ADF Foods and Gokul Refoils 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 Gokul Refoils. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADF Foods and Gokul Refoils.

Diversification Opportunities for ADF Foods and Gokul Refoils

0.43

Correlation Coefficient

ADF Foods  Gokul Refoils

Very weak diversification

The 3 months correlation between ADF and Gokul is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and Gokul Refoils and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gokul Refoils 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 Gokul Refoils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gokul Refoils has no effect on the direction of ADF Foods i.e., ADF Foods and Gokul Refoils go up and down completely randomly.

Pair Corralation between ADF Foods and Gokul Refoils

Assuming the 90 days trading horizon ADF Foods Limited is expected to under-perform the Gokul Refoils. In addition to that, ADF Foods is 2.01 times more volatile than Gokul Refoils and. It trades about -0.26 of its total potential returns per unit of risk. Gokul Refoils and is currently generating about 0.24 per unit of volatility. If you would invest  6,133  in Gokul Refoils and on October 8, 2024 and sell it today you would earn a total of  349.00  from holding Gokul Refoils and or generate 5.69% return on investment over 90 days.

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

ADF Foods Limited  vs.  Gokul Refoils and

ADF Foods Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ADF Foods may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gokul Refoils

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADF Foods and Gokul Refoils

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

The idea behind ADF Foods Limited and Gokul Refoils and 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.