Correlation Between Bharatiya Global and ADF Foods

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

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

Diversification Opportunities for Bharatiya Global and ADF Foods

-0.29

Correlation Coefficient

Bharatiya Global  ADF Foods

Very good diversification

The 3 months correlation between Bharatiya and ADF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bharatiya Global Infomedia and ADF Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Foods Limited and Bharatiya Global 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 Bharatiya Global Infomedia are associated (or correlated) with ADF Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Foods Limited has no effect on the direction of Bharatiya Global i.e., Bharatiya Global and ADF Foods go up and down completely randomly.

Pair Corralation between Bharatiya Global and ADF Foods

Assuming the 90 days trading horizon Bharatiya Global is expected to generate 2.23 times less return on investment than ADF Foods. But when comparing it to its historical volatility, Bharatiya Global Infomedia is 1.78 times less risky than ADF Foods. It trades about 0.04 of its potential returns per unit of risk. ADF Foods Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13,818  in ADF Foods Limited on December 2, 2024 and sell it today you would earn a total of  9,707  from holding ADF Foods Limited or generate 70.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Bharatiya Global Infomedia  vs.  ADF Foods Limited

Bharatiya Global Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bharatiya Global Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Bharatiya Global is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ADF Foods Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADF Foods Limited 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 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 Bharatiya Global and ADF Foods

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

The idea behind Bharatiya Global Infomedia and ADF Foods 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.