Correlation Between Univa Foods and Mahamaya Steel

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

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

Diversification Opportunities for Univa Foods and Mahamaya Steel

0.93

Correlation Coefficient

Univa Foods  Mahamaya Steel

Almost no diversification

The 3 months correlation between Univa and Mahamaya is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Univa Foods Limited and Mahamaya Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahamaya Steel Industries and Univa 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 Univa Foods Limited are associated (or correlated) with Mahamaya Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahamaya Steel Industries has no effect on the direction of Univa Foods i.e., Univa Foods and Mahamaya Steel go up and down completely randomly.

Pair Corralation between Univa Foods and Mahamaya Steel

Assuming the 90 days trading horizon Univa Foods is expected to generate 3.2 times less return on investment than Mahamaya Steel. But when comparing it to its historical volatility, Univa Foods Limited is 2.63 times less risky than Mahamaya Steel. It trades about 0.18 of its potential returns per unit of risk. Mahamaya Steel Industries is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  19,657  in Mahamaya Steel Industries on December 29, 2024 and sell it today you would earn a total of  6,845  from holding Mahamaya Steel Industries or generate 34.82% return on investment over 90 days.

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

Univa Foods Limited  vs.  Mahamaya Steel Industries

Univa Foods Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Univa Foods Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Univa Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mahamaya Steel Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mahamaya Steel Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Mahamaya Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Univa Foods and Mahamaya Steel

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

The idea behind Univa Foods Limited and Mahamaya Steel Industries 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.