Correlation Between Next Mediaworks and Hindustan Foods

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

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

Diversification Opportunities for Next Mediaworks and Hindustan Foods

-0.25

Correlation Coefficient

Next Mediaworks  Hindustan Foods

Very good diversification

The 3 months correlation between Next and Hindustan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Next Mediaworks Limited and Hindustan Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Foods and Next Mediaworks 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 Next Mediaworks Limited are associated (or correlated) with Hindustan Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Foods has no effect on the direction of Next Mediaworks i.e., Next Mediaworks and Hindustan Foods go up and down completely randomly.

Pair Corralation between Next Mediaworks and Hindustan Foods

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to under-perform the Hindustan Foods. In addition to that, Next Mediaworks is 1.02 times more volatile than Hindustan Foods Limited. It trades about -0.18 of its total potential returns per unit of risk. Hindustan Foods Limited is currently generating about 0.06 per unit of volatility. If you would invest  51,505  in Hindustan Foods Limited on December 27, 2024 and sell it today you would earn a total of  3,655  from holding Hindustan Foods Limited or generate 7.1% return on investment over 90 days.

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

Next Mediaworks Limited  vs.  Hindustan Foods Limited

Next Mediaworks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Next Mediaworks Limited 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 fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hindustan Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hindustan Foods Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Hindustan Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Next Mediaworks and Hindustan Foods

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

The idea behind Next Mediaworks Limited and Hindustan 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.