Correlation Between Metalyst Forgings and Megastar Foods

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

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

Diversification Opportunities for Metalyst Forgings and Megastar Foods

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Correlation Coefficient

Metalyst Forgings  Megastar Foods

Pay attention - limited upside

The 3 months correlation between Metalyst and Megastar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metalyst Forgings Limited and Megastar Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megastar Foods and Metalyst Forgings 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 Metalyst Forgings Limited are associated (or correlated) with Megastar Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megastar Foods has no effect on the direction of Metalyst Forgings i.e., Metalyst Forgings and Megastar Foods go up and down completely randomly.

Pair Corralation between Metalyst Forgings and Megastar Foods

If you would invest  23,110  in Megastar Foods Limited on September 15, 2024 and sell it today you would earn a total of  682.00  from holding Megastar Foods Limited or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Metalyst Forgings Limited  vs.  Megastar Foods Limited

Metalyst Forgings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Metalyst Forgings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Metalyst Forgings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Megastar Foods

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Megastar Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Pair Trading with Metalyst Forgings and Megastar Foods

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

The idea behind Metalyst Forgings Limited and Megastar 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.