Correlation Between Exide Industries and Agro Phos

Can any of the company-specific risk be diversified away by investing in both Exide Industries and Agro Phos 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 Exide Industries and Agro Phos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exide Industries Limited and Agro Phos India, you can compare the effects of market volatilities on Exide Industries and Agro Phos 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 Exide Industries with a short position of Agro Phos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exide Industries and Agro Phos.

Diversification Opportunities for Exide Industries and Agro Phos

0.83

Correlation Coefficient

Exide Industries  Agro Phos

Very poor diversification

The 3 months correlation between Exide and Agro is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Exide Industries Limited and Agro Phos India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Phos India and Exide Industries 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 Exide Industries Limited are associated (or correlated) with Agro Phos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Phos India has no effect on the direction of Exide Industries i.e., Exide Industries and Agro Phos go up and down completely randomly.

Pair Corralation between Exide Industries and Agro Phos

Assuming the 90 days trading horizon Exide Industries Limited is expected to under-perform the Agro Phos. But the stock apears to be less risky and, when comparing its historical volatility, Exide Industries Limited is 1.51 times less risky than Agro Phos. The stock trades about -0.2 of its potential returns per unit of risk. The Agro Phos India is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,669  in Agro Phos India on October 9, 2024 and sell it today you would lose (631.00) from holding Agro Phos India or give up 13.51% of portfolio value over 90 days.

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

Exide Industries Limited  vs.  Agro Phos India

Exide Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exide Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Agro Phos India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agro Phos India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Exide Industries and Agro Phos

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

The idea behind Exide Industries Limited and Agro Phos India 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.