Correlation Between Hindustan Foods and Kalyani Investment

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

Diversification Opportunities for Hindustan Foods and Kalyani Investment

-0.11

Correlation Coefficient

Hindustan Foods  Kalyani Investment

Good diversification

The 3 months correlation between Hindustan and Kalyani is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Foods Limited and Kalyani Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Investment 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 Kalyani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Investment has no effect on the direction of Hindustan Foods i.e., Hindustan Foods and Kalyani Investment go up and down completely randomly.

Pair Corralation between Hindustan Foods and Kalyani Investment

Assuming the 90 days trading horizon Hindustan Foods Limited is expected to generate 0.93 times more return on investment than Kalyani Investment. However, Hindustan Foods Limited is 1.07 times less risky than Kalyani Investment. It trades about 0.09 of its potential returns per unit of risk. Kalyani Investment is currently generating about -0.29 per unit of risk. If you would invest  53,940  in Hindustan Foods Limited on September 21, 2024 and sell it today you would earn a total of  1,710  from holding Hindustan Foods Limited or generate 3.17% 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.  Kalyani Investment

Hindustan Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kalyani Investment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalyani Investment is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hindustan Foods and Kalyani Investment

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

The idea behind Hindustan Foods Limited and Kalyani Investment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.