Correlation Between Patanjali Foods and Steel Authority

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

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

Diversification Opportunities for Patanjali Foods and Steel Authority

-0.03

Correlation Coefficient

Patanjali Foods  Steel Authority

Good diversification

The 3 months correlation between Patanjali and Steel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Patanjali Foods Limited and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and Patanjali Foods 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 Patanjali Foods Limited are associated (or correlated) with Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of Patanjali Foods i.e., Patanjali Foods and Steel Authority go up and down completely randomly.

Pair Corralation between Patanjali Foods and Steel Authority

Assuming the 90 days trading horizon Patanjali Foods Limited is expected to generate 0.5 times more return on investment than Steel Authority. However, Patanjali Foods Limited is 2.01 times less risky than Steel Authority. It trades about 0.02 of its potential returns per unit of risk. Steel Authority of is currently generating about -0.05 per unit of risk. If you would invest  181,030  in Patanjali Foods Limited on November 29, 2024 and sell it today you would earn a total of  1,515  from holding Patanjali Foods Limited or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Patanjali Foods Limited  vs.  Steel Authority of

Patanjali Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patanjali Foods Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Patanjali Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Steel Authority

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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 Patanjali Foods and Steel Authority

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

The idea behind Patanjali Foods Limited and Steel Authority of 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.