Correlation Between Agro Tech and Sri Havisha

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

By analyzing existing cross correlation between Agro Tech Foods and Sri Havisha Hospitality, you can compare the effects of market volatilities on Agro Tech and Sri Havisha 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 Agro Tech with a short position of Sri Havisha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Sri Havisha.

Diversification Opportunities for Agro Tech and Sri Havisha

0.48

Correlation Coefficient

Agro Tech  Sri Havisha

Very weak diversification

The 3 months correlation between Agro and Sri is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Sri Havisha Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Havisha Hospitality and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Sri Havisha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Havisha Hospitality has no effect on the direction of Agro Tech i.e., Agro Tech and Sri Havisha go up and down completely randomly.

Pair Corralation between Agro Tech and Sri Havisha

Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 0.55 times more return on investment than Sri Havisha. However, Agro Tech Foods is 1.8 times less risky than Sri Havisha. It trades about -0.05 of its potential returns per unit of risk. Sri Havisha Hospitality is currently generating about -0.04 per unit of risk. If you would invest  96,440  in Agro Tech Foods on October 10, 2024 and sell it today you would lose (2,285) from holding Agro Tech Foods or give up 2.37% of portfolio value over 90 days.

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

Agro Tech Foods  vs.  Sri Havisha Hospitality

Agro Tech Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agro Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sri Havisha Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sri Havisha Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sri Havisha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agro Tech and Sri Havisha

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

The idea behind Agro Tech Foods and Sri Havisha Hospitality 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.