Correlation Between Agarwal Industrial and Biofil Chemicals

Can any of the company-specific risk be diversified away by investing in both Agarwal Industrial and Biofil Chemicals 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 Agarwal Industrial and Biofil Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agarwal Industrial and Biofil Chemicals Pharmaceuticals, you can compare the effects of market volatilities on Agarwal Industrial and Biofil Chemicals 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 Agarwal Industrial with a short position of Biofil Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agarwal Industrial and Biofil Chemicals.

Diversification Opportunities for Agarwal Industrial and Biofil Chemicals

0.07

Correlation Coefficient

Agarwal Industrial  Biofil Chemicals

Significant diversification

The 3 months correlation between Agarwal and Biofil is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Biofil Chemicals Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofil Chemicals Pha and Agarwal Industrial 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 Agarwal Industrial are associated (or correlated) with Biofil Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofil Chemicals Pha has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Biofil Chemicals go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Biofil Chemicals

Assuming the 90 days trading horizon Agarwal Industrial is expected to generate 1.08 times more return on investment than Biofil Chemicals. However, Agarwal Industrial is 1.08 times more volatile than Biofil Chemicals Pharmaceuticals. It trades about 0.54 of its potential returns per unit of risk. Biofil Chemicals Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  100,495  in Agarwal Industrial on September 23, 2024 and sell it today you would earn a total of  33,085  from holding Agarwal Industrial or generate 32.92% return on investment over 90 days.

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

Agarwal Industrial  vs.  Biofil Chemicals Pharmaceutica

Agarwal Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Agarwal Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biofil Chemicals Pha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biofil Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Agarwal Industrial and Biofil Chemicals

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

The idea behind Agarwal Industrial and Biofil Chemicals Pharmaceuticals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.