Correlation Between Parag Milk and Apex Frozen

Can any of the company-specific risk be diversified away by investing in both Parag Milk and Apex Frozen 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 Parag Milk and Apex Frozen into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Parag Milk and Apex Frozen

0.14

Correlation Coefficient

Parag Milk  Apex Frozen

Average diversification

The 3 months correlation between Parag and Apex is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Parag Milk Foods and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods and Parag Milk 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 Parag Milk Foods are associated (or correlated) with Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Parag Milk i.e., Parag Milk and Apex Frozen go up and down completely randomly.

Pair Corralation between Parag Milk and Apex Frozen

Assuming the 90 days trading horizon Parag Milk Foods is expected to under-perform the Apex Frozen. But the stock apears to be less risky and, when comparing its historical volatility, Parag Milk Foods is 1.77 times less risky than Apex Frozen. The stock trades about -0.02 of its potential returns per unit of risk. The Apex Frozen Foods is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  23,140  in Apex Frozen Foods on September 19, 2024 and sell it today you would earn a total of  3,651  from holding Apex Frozen Foods or generate 15.78% return on investment over 90 days.

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

Parag Milk Foods  vs.  Apex Frozen Foods

Parag Milk Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Parag Milk Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Parag Milk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Apex Frozen Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Parag Milk and Apex Frozen

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

The idea behind Parag Milk Foods and Apex Frozen Foods 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.