Correlation Between WorldCall Telecom and Fauji Foods

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

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

Diversification Opportunities for WorldCall Telecom and Fauji Foods

0.61

Correlation Coefficient

WorldCall Telecom  Fauji Foods

Poor diversification

The 3 months correlation between WorldCall and Fauji is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WorldCall Telecom and Fauji Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fauji Foods and WorldCall Telecom 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 WorldCall Telecom are associated (or correlated) with Fauji Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fauji Foods has no effect on the direction of WorldCall Telecom i.e., WorldCall Telecom and Fauji Foods go up and down completely randomly.

Pair Corralation between WorldCall Telecom and Fauji Foods

Assuming the 90 days trading horizon WorldCall Telecom is expected to generate 6.73 times less return on investment than Fauji Foods. In addition to that, WorldCall Telecom is 1.2 times more volatile than Fauji Foods. It trades about 0.01 of its total potential returns per unit of risk. Fauji Foods is currently generating about 0.06 per unit of volatility. If you would invest  1,362  in Fauji Foods on December 2, 2024 and sell it today you would earn a total of  124.00  from holding Fauji Foods or generate 9.1% return on investment over 90 days.

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

WorldCall Telecom  vs.  Fauji Foods

WorldCall Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days WorldCall Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, WorldCall Telecom is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fauji Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fauji Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fauji Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with WorldCall Telecom and Fauji Foods

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

The idea behind WorldCall Telecom and Fauji 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.