Correlation Between Fine Organic and Raj Rayon

Can any of the company-specific risk be diversified away by investing in both Fine Organic and Raj Rayon 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 Fine Organic and Raj Rayon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fine Organic Industries and Raj Rayon Industries, you can compare the effects of market volatilities on Fine Organic and Raj Rayon 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 Fine Organic with a short position of Raj Rayon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Organic and Raj Rayon.

Diversification Opportunities for Fine Organic and Raj Rayon

-0.08

Correlation Coefficient

Fine Organic  Raj Rayon

Good diversification

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

Pair Corralation between Fine Organic and Raj Rayon

Assuming the 90 days trading horizon Fine Organic Industries is expected to under-perform the Raj Rayon. But the stock apears to be less risky and, when comparing its historical volatility, Fine Organic Industries is 1.04 times less risky than Raj Rayon. The stock trades about -0.35 of its potential returns per unit of risk. The Raj Rayon Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,274  in Raj Rayon Industries on December 2, 2024 and sell it today you would earn a total of  101.00  from holding Raj Rayon Industries or generate 4.44% return on investment over 90 days.

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

Fine Organic Industries  vs.  Raj Rayon Industries

Fine Organic Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Raj Rayon Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raj Rayon Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Raj Rayon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fine Organic and Raj Rayon

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

The idea behind Fine Organic Industries and Raj Rayon Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.