Correlation Between Bikaji Foods and MSP Steel

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

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

Diversification Opportunities for Bikaji Foods and MSP Steel

0.76

Correlation Coefficient

Bikaji Foods  MSP Steel

Poor diversification

The 3 months correlation between Bikaji and MSP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bikaji Foods International and MSP Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Steel Power and Bikaji 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 Bikaji Foods International are associated (or correlated) with MSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Steel Power has no effect on the direction of Bikaji Foods i.e., Bikaji Foods and MSP Steel go up and down completely randomly.

Pair Corralation between Bikaji Foods and MSP Steel

Assuming the 90 days trading horizon Bikaji Foods is expected to generate 2.36 times less return on investment than MSP Steel. But when comparing it to its historical volatility, Bikaji Foods International is 1.41 times less risky than MSP Steel. It trades about 0.07 of its potential returns per unit of risk. MSP Steel Power is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  960.00  in MSP Steel Power on September 28, 2024 and sell it today you would earn a total of  3,544  from holding MSP Steel Power or generate 369.17% return on investment over 90 days.

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

Bikaji Foods International  vs.  MSP Steel Power

Bikaji Foods Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bikaji Foods International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MSP Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSP Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bikaji Foods and MSP Steel

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

The idea behind Bikaji Foods International and MSP Steel Power 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.