Correlation Between DiGiSPICE Technologies and Patanjali Foods

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

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

Diversification Opportunities for DiGiSPICE Technologies and Patanjali Foods

-0.42

Correlation Coefficient

DiGiSPICE Technologies  Patanjali Foods

Very good diversification

The 3 months correlation between DiGiSPICE and Patanjali is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DiGiSPICE Technologies Limited and Patanjali Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patanjali Foods and DiGiSPICE Technologies 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 DiGiSPICE Technologies Limited are associated (or correlated) with Patanjali Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patanjali Foods has no effect on the direction of DiGiSPICE Technologies i.e., DiGiSPICE Technologies and Patanjali Foods go up and down completely randomly.

Pair Corralation between DiGiSPICE Technologies and Patanjali Foods

Assuming the 90 days trading horizon DiGiSPICE Technologies Limited is expected to generate 1.36 times more return on investment than Patanjali Foods. However, DiGiSPICE Technologies is 1.36 times more volatile than Patanjali Foods Limited. It trades about 0.29 of its potential returns per unit of risk. Patanjali Foods Limited is currently generating about -0.08 per unit of risk. If you would invest  2,711  in DiGiSPICE Technologies Limited on September 21, 2024 and sell it today you would earn a total of  412.00  from holding DiGiSPICE Technologies Limited or generate 15.2% return on investment over 90 days.

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

DiGiSPICE Technologies Limited  vs.  Patanjali Foods Limited

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Patanjali Foods

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patanjali Foods Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Patanjali Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DiGiSPICE Technologies and Patanjali Foods

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

The idea behind DiGiSPICE Technologies Limited and Patanjali 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.