Correlation Between Apex Frozen and Prakash Steelage

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

Diversification Opportunities for Apex Frozen and Prakash Steelage

0.56

Correlation Coefficient

Apex Frozen  Prakash Steelage

Very weak diversification

The 3 months correlation between Apex and Prakash is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apex Frozen Foods and Prakash Steelage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prakash Steelage 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 Prakash Steelage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prakash Steelage has no effect on the direction of Apex Frozen i.e., Apex Frozen and Prakash Steelage go up and down completely randomly.

Pair Corralation between Apex Frozen and Prakash Steelage

Assuming the 90 days trading horizon Apex Frozen Foods is expected to generate 1.05 times more return on investment than Prakash Steelage. However, Apex Frozen is 1.05 times more volatile than Prakash Steelage Limited. It trades about -0.01 of its potential returns per unit of risk. Prakash Steelage Limited is currently generating about -0.06 per unit of risk. If you would invest  24,920  in Apex Frozen Foods on September 30, 2024 and sell it today you would lose (910.00) from holding Apex Frozen Foods or give up 3.65% of portfolio value over 90 days.

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

Apex Frozen Foods  vs.  Prakash Steelage Limited

Apex Frozen Foods

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Apex Frozen is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Prakash Steelage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prakash Steelage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic 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 Apex Frozen and Prakash Steelage

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

The idea behind Apex Frozen Foods and Prakash Steelage 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.