Correlation Between Fine Organic and Zomato

Can any of the company-specific risk be diversified away by investing in both Fine Organic and Zomato 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 Zomato 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 Zomato Limited, you can compare the effects of market volatilities on Fine Organic and Zomato 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 Zomato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Organic and Zomato.

Diversification Opportunities for Fine Organic and Zomato

0.34

Correlation Coefficient

Fine Organic  Zomato

Weak diversification

The 3 months correlation between Fine and Zomato is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fine Organic Industries and Zomato Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zomato Limited 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 Zomato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zomato Limited has no effect on the direction of Fine Organic i.e., Fine Organic and Zomato go up and down completely randomly.

Pair Corralation between Fine Organic and Zomato

Assuming the 90 days trading horizon Fine Organic Industries is expected to generate 0.99 times more return on investment than Zomato. However, Fine Organic Industries is 1.01 times less risky than Zomato. It trades about -0.25 of its potential returns per unit of risk. Zomato Limited is currently generating about -0.47 per unit of risk. If you would invest  493,060  in Fine Organic Industries on October 15, 2024 and sell it today you would lose (47,305) from holding Fine Organic Industries or give up 9.59% of portfolio value over 90 days.

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

Fine Organic Industries  vs.  Zomato Limited

Fine Organic Industries

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Zomato Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zomato Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fine Organic and Zomato

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

The idea behind Fine Organic Industries and Zomato 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.