Correlation Between Mangalam Drugs and LT Foods

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

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

Diversification Opportunities for Mangalam Drugs and LT Foods

0.8

Correlation Coefficient

Mangalam Drugs  LT Foods

Very poor diversification

The 3 months correlation between Mangalam and LTFOODS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mangalam Drugs And and LT Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Foods Limited and Mangalam Drugs 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 Mangalam Drugs And are associated (or correlated) with LT Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Foods Limited has no effect on the direction of Mangalam Drugs i.e., Mangalam Drugs and LT Foods go up and down completely randomly.

Pair Corralation between Mangalam Drugs and LT Foods

Assuming the 90 days trading horizon Mangalam Drugs And is expected to under-perform the LT Foods. In addition to that, Mangalam Drugs is 1.2 times more volatile than LT Foods Limited. It trades about -0.18 of its total potential returns per unit of risk. LT Foods Limited is currently generating about -0.04 per unit of volatility. If you would invest  42,133  in LT Foods Limited on December 28, 2024 and sell it today you would lose (4,458) from holding LT Foods Limited or give up 10.58% of portfolio value over 90 days.

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

Mangalam Drugs And  vs.  LT Foods Limited

Mangalam Drugs And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mangalam Drugs And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LT Foods Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days LT Foods Limited 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 Mangalam Drugs and LT Foods

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

The idea behind Mangalam Drugs And and LT Foods 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.