Correlation Between ADF Foods and NIIT LEARNING

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

Diversification Opportunities for ADF Foods and NIIT LEARNING

0.57

Correlation Coefficient

ADF Foods  NIIT LEARNING

Very weak diversification

The 3 months correlation between ADF and NIIT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and NIIT LEARNING SYSTEMS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT LEARNING SYSTEMS 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 NIIT LEARNING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT LEARNING SYSTEMS has no effect on the direction of ADF Foods i.e., ADF Foods and NIIT LEARNING go up and down completely randomly.

Pair Corralation between ADF Foods and NIIT LEARNING

Assuming the 90 days trading horizon ADF Foods Limited is expected to generate 1.22 times more return on investment than NIIT LEARNING. However, ADF Foods is 1.22 times more volatile than NIIT LEARNING SYSTEMS. It trades about -0.04 of its potential returns per unit of risk. NIIT LEARNING SYSTEMS is currently generating about -0.05 per unit of risk. If you would invest  29,516  in ADF Foods Limited on October 20, 2024 and sell it today you would lose (2,471) from holding ADF Foods Limited or give up 8.37% of portfolio value over 90 days.

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

ADF Foods Limited  vs.  NIIT LEARNING SYSTEMS

ADF Foods Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADF Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ADF Foods is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

NIIT LEARNING SYSTEMS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIIT LEARNING SYSTEMS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ADF Foods and NIIT LEARNING

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

The idea behind ADF Foods Limited and NIIT LEARNING SYSTEMS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.