Correlation Between HEG and Bikaji Foods

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

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

Diversification Opportunities for HEG and Bikaji Foods

0.1

Correlation Coefficient

HEG  Bikaji Foods

Average diversification

The 3 months correlation between HEG and Bikaji is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HEG Limited and Bikaji Foods International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bikaji Foods Interna and HEG 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 HEG Limited are associated (or correlated) with Bikaji Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bikaji Foods Interna has no effect on the direction of HEG i.e., HEG and Bikaji Foods go up and down completely randomly.

Pair Corralation between HEG and Bikaji Foods

Assuming the 90 days trading horizon HEG Limited is expected to generate 99.47 times more return on investment than Bikaji Foods. However, HEG is 99.47 times more volatile than Bikaji Foods International. It trades about 0.19 of its potential returns per unit of risk. Bikaji Foods International is currently generating about 0.07 per unit of risk. If you would invest  16,946  in HEG Limited on October 24, 2024 and sell it today you would earn a total of  24,674  from holding HEG Limited or generate 145.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.45%
Values	Daily Returns

HEG Limited  vs.  Bikaji Foods International

HEG Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEG Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HEG is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Bikaji Foods Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bikaji Foods International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HEG and Bikaji Foods

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

The idea behind HEG Limited and Bikaji Foods International 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.