Correlation Between Bikaji Foods and Landmark Cars

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

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

Diversification Opportunities for Bikaji Foods and Landmark Cars

0.08

Correlation Coefficient

Bikaji Foods  Landmark Cars

Significant diversification

The 3 months correlation between Bikaji and Landmark is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bikaji Foods International and Landmark Cars Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landmark Cars Limited and Bikaji Foods 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 Bikaji Foods International are associated (or correlated) with Landmark Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landmark Cars Limited has no effect on the direction of Bikaji Foods i.e., Bikaji Foods and Landmark Cars go up and down completely randomly.

Pair Corralation between Bikaji Foods and Landmark Cars

Assuming the 90 days trading horizon Bikaji Foods International is expected to under-perform the Landmark Cars. In addition to that, Bikaji Foods is 1.33 times more volatile than Landmark Cars Limited. It trades about -0.04 of its total potential returns per unit of risk. Landmark Cars Limited is currently generating about 0.09 per unit of volatility. If you would invest  60,173  in Landmark Cars Limited on September 4, 2024 and sell it today you would earn a total of  5,772  from holding Landmark Cars Limited or generate 9.59% return on investment over 90 days.

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

Bikaji Foods International  vs.  Landmark Cars Limited

Bikaji Foods Interna

Risk-Adjusted Performance

0 of 100

Very Weak

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

Landmark Cars Limited

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Landmark Cars Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Landmark Cars may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bikaji Foods and Landmark Cars

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

The idea behind Bikaji Foods International and Landmark Cars 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.