Correlation Between Khyber Tobacco and Agritech

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

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

Diversification Opportunities for Khyber Tobacco and Agritech

0.15

Correlation Coefficient

Khyber Tobacco  Agritech

Average diversification

The 3 months correlation between Khyber and Agritech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Khyber Tobacco and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech and Khyber Tobacco 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 Khyber Tobacco are associated (or correlated) with Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of Khyber Tobacco i.e., Khyber Tobacco and Agritech go up and down completely randomly.

Pair Corralation between Khyber Tobacco and Agritech

Assuming the 90 days trading horizon Khyber Tobacco is expected to under-perform the Agritech. In addition to that, Khyber Tobacco is 1.57 times more volatile than Agritech. It trades about -0.24 of its total potential returns per unit of risk. Agritech is currently generating about 0.11 per unit of volatility. If you would invest  3,156  in Agritech on September 3, 2024 and sell it today you would earn a total of  629.00  from holding Agritech or generate 19.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.5%
Values	Daily Returns

Khyber Tobacco  vs.  Agritech

Khyber Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khyber Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Agritech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agritech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agritech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khyber Tobacco and Agritech

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

The idea behind Khyber Tobacco and Agritech 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.