Correlation Between RENUKA FOODS and THE KINGSBURY

Can any of the company-specific risk be diversified away by investing in both RENUKA FOODS and THE KINGSBURY 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 RENUKA FOODS and THE KINGSBURY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RENUKA FOODS PLC and THE KINGSBURY PLC, you can compare the effects of market volatilities on RENUKA FOODS and THE KINGSBURY 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 RENUKA FOODS with a short position of THE KINGSBURY. Check out your portfolio center. Please also check ongoing floating volatility patterns of RENUKA FOODS and THE KINGSBURY.

Diversification Opportunities for RENUKA FOODS and THE KINGSBURY

-0.21

Correlation Coefficient

RENUKA FOODS  THE KINGSBURY

Very good diversification

The 3 months correlation between RENUKA and THE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding RENUKA FOODS PLC and THE KINGSBURY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE KINGSBURY PLC and RENUKA 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 RENUKA FOODS PLC are associated (or correlated) with THE KINGSBURY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE KINGSBURY PLC has no effect on the direction of RENUKA FOODS i.e., RENUKA FOODS and THE KINGSBURY go up and down completely randomly.

Pair Corralation between RENUKA FOODS and THE KINGSBURY

Assuming the 90 days trading horizon RENUKA FOODS PLC is expected to under-perform the THE KINGSBURY. In addition to that, RENUKA FOODS is 1.45 times more volatile than THE KINGSBURY PLC. It trades about -0.02 of its total potential returns per unit of risk. THE KINGSBURY PLC is currently generating about 0.06 per unit of volatility. If you would invest  830.00  in THE KINGSBURY PLC on October 11, 2024 and sell it today you would earn a total of  490.00  from holding THE KINGSBURY PLC or generate 59.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.64%
Values	Daily Returns

RENUKA FOODS PLC  vs.  THE KINGSBURY PLC

RENUKA FOODS PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RENUKA FOODS PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RENUKA FOODS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

THE KINGSBURY PLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in THE KINGSBURY PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, THE KINGSBURY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RENUKA FOODS and THE KINGSBURY

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

The idea behind RENUKA FOODS PLC and THE KINGSBURY PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.