Correlation Between Agro Tech and Ravi Kumar

Can any of the company-specific risk be diversified away by investing in both Agro Tech and Ravi Kumar 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 Ravi Kumar 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 Ravi Kumar Distilleries, you can compare the effects of market volatilities on Agro Tech and Ravi Kumar 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 Ravi Kumar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Ravi Kumar.

Diversification Opportunities for Agro Tech and Ravi Kumar

-0.12

Correlation Coefficient

Agro Tech  Ravi Kumar

Good diversification

The 3 months correlation between Agro and Ravi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Ravi Kumar Distilleries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ravi Kumar Distilleries 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 Ravi Kumar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ravi Kumar Distilleries has no effect on the direction of Agro Tech i.e., Agro Tech and Ravi Kumar go up and down completely randomly.

Pair Corralation between Agro Tech and Ravi Kumar

Assuming the 90 days trading horizon Agro Tech is expected to generate 2.49 times less return on investment than Ravi Kumar. But when comparing it to its historical volatility, Agro Tech Foods is 1.14 times less risky than Ravi Kumar. It trades about 0.02 of its potential returns per unit of risk. Ravi Kumar Distilleries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,815  in Ravi Kumar Distilleries on September 26, 2024 and sell it today you would earn a total of  1,066  from holding Ravi Kumar Distilleries or generate 58.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.56%
Values	Daily Returns

Agro Tech Foods  vs.  Ravi Kumar Distilleries

Agro Tech Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Agro Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ravi Kumar Distilleries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ravi Kumar Distilleries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ravi Kumar 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 Agro Tech and Ravi Kumar

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

The idea behind Agro Tech Foods and Ravi Kumar Distilleries 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.