Correlation Between Indian Metals and Apex Frozen

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

By analyzing existing cross correlation between Indian Metals Ferro and Apex Frozen Foods, you can compare the effects of market volatilities on Indian Metals and Apex Frozen 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 Indian Metals with a short position of Apex Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and Apex Frozen.

Diversification Opportunities for Indian Metals and Apex Frozen

0.76

Correlation Coefficient

Indian Metals  Apex Frozen

Poor diversification

The 3 months correlation between Indian and Apex is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Indian Metals i.e., Indian Metals and Apex Frozen go up and down completely randomly.

Pair Corralation between Indian Metals and Apex Frozen

Assuming the 90 days trading horizon Indian Metals Ferro is expected to under-perform the Apex Frozen. But the stock apears to be less risky and, when comparing its historical volatility, Indian Metals Ferro is 1.21 times less risky than Apex Frozen. The stock trades about -0.15 of its potential returns per unit of risk. The Apex Frozen Foods is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  23,776  in Apex Frozen Foods on December 30, 2024 and sell it today you would lose (2,737) from holding Apex Frozen Foods or give up 11.51% of portfolio value over 90 days.

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

Indian Metals Ferro  vs.  Apex Frozen Foods

Indian Metals Ferro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indian Metals Ferro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.

Apex Frozen Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apex Frozen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Indian Metals and Apex Frozen

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

The idea behind Indian Metals Ferro and Apex Frozen Foods 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.