Correlation Between ADF Foods and Shivalik Bimetal

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

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

Diversification Opportunities for ADF Foods and Shivalik Bimetal

-0.28

Correlation Coefficient

ADF Foods  Shivalik Bimetal

Very good diversification

The 3 months correlation between ADF and Shivalik is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls and ADF 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 ADF Foods Limited are associated (or correlated) with Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of ADF Foods i.e., ADF Foods and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between ADF Foods and Shivalik Bimetal

Assuming the 90 days trading horizon ADF Foods Limited is expected to generate 1.39 times more return on investment than Shivalik Bimetal. However, ADF Foods is 1.39 times more volatile than Shivalik Bimetal Controls. It trades about 0.07 of its potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about -0.07 per unit of risk. If you would invest  26,388  in ADF Foods Limited on September 28, 2024 and sell it today you would earn a total of  3,427  from holding ADF Foods Limited or generate 12.99% return on investment over 90 days.

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

ADF Foods Limited  vs.  Shivalik Bimetal Controls

ADF Foods Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Foods Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ADF Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 ADF Foods and Shivalik Bimetal

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

The idea behind ADF Foods Limited and Shivalik Bimetal Controls 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 Global Correlations module to find global opportunities by holding instruments from different markets.