Correlation Between Apex Frozen and MRF

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

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

Diversification Opportunities for Apex Frozen and MRF

0.7

Correlation Coefficient

Apex Frozen  MRF

Poor diversification

The 3 months correlation between Apex and MRF is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apex Frozen Foods and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited and Apex Frozen 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 Apex Frozen Foods are associated (or correlated) with MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Apex Frozen i.e., Apex Frozen and MRF go up and down completely randomly.

Pair Corralation between Apex Frozen and MRF

Assuming the 90 days trading horizon Apex Frozen Foods is expected to generate 2.95 times more return on investment than MRF. However, Apex Frozen is 2.95 times more volatile than MRF Limited. It trades about -0.04 of its potential returns per unit of risk. MRF Limited is currently generating about -0.19 per unit of risk. If you would invest  23,776  in Apex Frozen Foods on December 29, 2024 and sell it today you would lose (2,737) from holding Apex Frozen Foods or give up 11.51% of portfolio value over 90 days.

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

Apex Frozen Foods  vs.  MRF Limited

Apex Frozen Foods

Risk-Adjusted Performance

Very Weak

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

MRF Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Apex Frozen and MRF

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

The idea behind Apex Frozen Foods and MRF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.