Correlation Between Kohinoor Foods and Lotus Eye

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

Diversification Opportunities for Kohinoor Foods and Lotus Eye

0.64

Correlation Coefficient

Kohinoor Foods  Lotus Eye

Poor diversification

The 3 months correlation between Kohinoor and Lotus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kohinoor Foods Limited and Lotus Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Eye Hospital 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 Lotus Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Eye Hospital has no effect on the direction of Kohinoor Foods i.e., Kohinoor Foods and Lotus Eye go up and down completely randomly.

Pair Corralation between Kohinoor Foods and Lotus Eye

Assuming the 90 days trading horizon Kohinoor Foods Limited is expected to generate 1.05 times more return on investment than Lotus Eye. However, Kohinoor Foods is 1.05 times more volatile than Lotus Eye Hospital. It trades about 0.03 of its potential returns per unit of risk. Lotus Eye Hospital is currently generating about 0.0 per unit of risk. If you would invest  3,630  in Kohinoor Foods Limited on October 4, 2024 and sell it today you would earn a total of  713.00  from holding Kohinoor Foods Limited or generate 19.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.38%
Values	Daily Returns

Kohinoor Foods Limited  vs.  Lotus Eye Hospital

Kohinoor Foods

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Kohinoor Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kohinoor Foods and Lotus Eye

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

The idea behind Kohinoor Foods Limited and Lotus Eye Hospital 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..