Correlation Between Kohinoor Foods and Linc

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

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

Diversification Opportunities for Kohinoor Foods and Linc

0.85

Correlation Coefficient

Kohinoor Foods  Linc

Very poor diversification

The 3 months correlation between Kohinoor and Linc is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kohinoor Foods Limited and Linc Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc Limited and Kohinoor 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 Kohinoor Foods Limited are associated (or correlated) with Linc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linc Limited has no effect on the direction of Kohinoor Foods i.e., Kohinoor Foods and Linc go up and down completely randomly.

Pair Corralation between Kohinoor Foods and Linc

Assuming the 90 days trading horizon Kohinoor Foods Limited is expected to generate 1.04 times more return on investment than Linc. However, Kohinoor Foods is 1.04 times more volatile than Linc Limited. It trades about -0.16 of its potential returns per unit of risk. Linc Limited is currently generating about -0.2 per unit of risk. If you would invest  4,729  in Kohinoor Foods Limited on December 26, 2024 and sell it today you would lose (1,438) from holding Kohinoor Foods Limited or give up 30.41% of portfolio value over 90 days.

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

Kohinoor Foods Limited  vs.  Linc Limited

Kohinoor Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kohinoor Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Linc Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Linc Limited 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 Kohinoor Foods and Linc

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

The idea behind Kohinoor Foods Limited and Linc Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.