Correlation Between Hindustan Foods and Computer Age

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

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

Diversification Opportunities for Hindustan Foods and Computer Age

-0.37

Correlation Coefficient

Hindustan Foods  Computer Age

Very good diversification

The 3 months correlation between Hindustan and Computer is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Foods Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and Hindustan Foods 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 Hindustan Foods Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of Hindustan Foods i.e., Hindustan Foods and Computer Age go up and down completely randomly.

Pair Corralation between Hindustan Foods and Computer Age

Assuming the 90 days trading horizon Hindustan Foods Limited is expected to generate 0.74 times more return on investment than Computer Age. However, Hindustan Foods Limited is 1.36 times less risky than Computer Age. It trades about 0.05 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.14 per unit of risk. If you would invest  51,680  in Hindustan Foods Limited on December 28, 2024 and sell it today you would earn a total of  3,335  from holding Hindustan Foods Limited or generate 6.45% return on investment over 90 days.

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

Hindustan Foods Limited  vs.  Computer Age Management

Hindustan Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hindustan Foods Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Hindustan Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Computer Age Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer Age Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hindustan Foods and Computer Age

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

The idea behind Hindustan Foods Limited and Computer Age Management 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 Global Correlations module to find global opportunities by holding instruments from different markets.