Correlation Between Agro Tech and Shree Pushkar

Can any of the company-specific risk be diversified away by investing in both Agro Tech and Shree Pushkar 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 Agro Tech and Shree Pushkar into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Agro Tech and Shree Pushkar

0.52

Correlation Coefficient

Agro Tech  Shree Pushkar

Very weak diversification

The 3 months correlation between Agro and Shree is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Shree Pushkar Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shree Pushkar Chemicals and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Shree Pushkar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shree Pushkar Chemicals has no effect on the direction of Agro Tech i.e., Agro Tech and Shree Pushkar go up and down completely randomly.

Pair Corralation between Agro Tech and Shree Pushkar

Assuming the 90 days trading horizon Agro Tech is expected to generate 1.28 times less return on investment than Shree Pushkar. In addition to that, Agro Tech is 1.13 times more volatile than Shree Pushkar Chemicals. It trades about 0.11 of its total potential returns per unit of risk. Shree Pushkar Chemicals is currently generating about 0.16 per unit of volatility. If you would invest  26,009  in Shree Pushkar Chemicals on September 13, 2024 and sell it today you would earn a total of  7,916  from holding Shree Pushkar Chemicals or generate 30.44% return on investment over 90 days.

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

Agro Tech Foods  vs.  Shree Pushkar Chemicals

Agro Tech Foods

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agro Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shree Pushkar Chemicals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shree Pushkar Chemicals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Shree Pushkar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agro Tech and Shree Pushkar

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

The idea behind Agro Tech Foods and Shree Pushkar Chemicals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.