Correlation Between Apex Frozen and Raj Rayon

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

Diversification Opportunities for Apex Frozen and Raj Rayon

-0.15

Correlation Coefficient

Apex Frozen  Raj Rayon

Good diversification

The 3 months correlation between Apex and Raj is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apex Frozen Foods and Raj Rayon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raj Rayon Industries 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 Raj Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raj Rayon Industries has no effect on the direction of Apex Frozen i.e., Apex Frozen and Raj Rayon go up and down completely randomly.

Pair Corralation between Apex Frozen and Raj Rayon

Assuming the 90 days trading horizon Apex Frozen Foods is expected to under-perform the Raj Rayon. In addition to that, Apex Frozen is 1.9 times more volatile than Raj Rayon Industries. It trades about -0.07 of its total potential returns per unit of risk. Raj Rayon Industries is currently generating about 0.05 per unit of volatility. If you would invest  2,274  in Raj Rayon Industries on December 2, 2024 and sell it today you would earn a total of  101.00  from holding Raj Rayon Industries or generate 4.44% return on investment over 90 days.

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

Apex Frozen Foods  vs.  Raj Rayon Industries

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 inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Raj Rayon Industries

Risk-Adjusted Performance

Insignificant

Over the last 90 days Raj Rayon Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Raj Rayon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apex Frozen and Raj Rayon

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

The idea behind Apex Frozen Foods and Raj Rayon Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.