Correlation Between Osia Hyper and Hindustan Foods

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

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

Diversification Opportunities for Osia Hyper and Hindustan Foods

0.9

Correlation Coefficient

Osia Hyper  Hindustan Foods

Almost no diversification

The 3 months correlation between Osia and Hindustan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Osia Hyper Retail and Hindustan Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Foods and Osia Hyper 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 Osia Hyper Retail 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 Osia Hyper i.e., Osia Hyper and Hindustan Foods go up and down completely randomly.

Pair Corralation between Osia Hyper and Hindustan Foods

Assuming the 90 days trading horizon Osia Hyper Retail is expected to under-perform the Hindustan Foods. In addition to that, Osia Hyper is 1.26 times more volatile than Hindustan Foods Limited. It trades about -0.15 of its total potential returns per unit of risk. Hindustan Foods Limited is currently generating about -0.08 per unit of volatility. If you would invest  62,690  in Hindustan Foods Limited on September 18, 2024 and sell it today you would lose (7,035) from holding Hindustan Foods Limited or give up 11.22% of portfolio value over 90 days.

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

Osia Hyper Retail  vs.  Hindustan Foods Limited

Osia Hyper Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osia Hyper Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hindustan Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Osia Hyper and Hindustan Foods

The main advantage of trading using opposite Osia Hyper and Hindustan Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osia Hyper 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 Osia Hyper Retail 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.