Correlation Between Palayan Resources and Aramark Holdings

Can any of the company-specific risk be diversified away by investing in both Palayan Resources and Aramark Holdings 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 Palayan Resources and Aramark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palayan Resources and Aramark Holdings, you can compare the effects of market volatilities on Palayan Resources and Aramark Holdings 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 Palayan Resources with a short position of Aramark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palayan Resources and Aramark Holdings.

Diversification Opportunities for Palayan Resources and Aramark Holdings

-0.15

Correlation Coefficient

Palayan Resources  Aramark Holdings

Good diversification

The 3 months correlation between Palayan and Aramark is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Palayan Resources and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings and Palayan Resources 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 Palayan Resources are associated (or correlated) with Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Palayan Resources i.e., Palayan Resources and Aramark Holdings go up and down completely randomly.

Pair Corralation between Palayan Resources and Aramark Holdings

Given the investment horizon of 90 days Palayan Resources is expected to under-perform the Aramark Holdings. In addition to that, Palayan Resources is 6.12 times more volatile than Aramark Holdings. It trades about -0.05 of its total potential returns per unit of risk. Aramark Holdings is currently generating about 0.03 per unit of volatility. If you would invest  3,787  in Aramark Holdings on October 24, 2024 and sell it today you would earn a total of  72.00  from holding Aramark Holdings or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Palayan Resources  vs.  Aramark Holdings

Palayan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palayan Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aramark Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aramark Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Palayan Resources and Aramark Holdings

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

The idea behind Palayan Resources and Aramark Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.