Correlation Between Fine Organic and Indian Card

Can any of the company-specific risk be diversified away by investing in both Fine Organic and Indian Card 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 Fine Organic and Indian Card into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fine Organic Industries and Indian Card Clothing, you can compare the effects of market volatilities on Fine Organic and Indian Card 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 Fine Organic with a short position of Indian Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Organic and Indian Card.

Diversification Opportunities for Fine Organic and Indian Card

0.76

Correlation Coefficient

Fine Organic  Indian Card

Poor diversification

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

Pair Corralation between Fine Organic and Indian Card

Assuming the 90 days trading horizon Fine Organic Industries is expected to generate 1.21 times more return on investment than Indian Card. However, Fine Organic is 1.21 times more volatile than Indian Card Clothing. It trades about -0.01 of its potential returns per unit of risk. Indian Card Clothing is currently generating about -0.07 per unit of risk. If you would invest  532,505  in Fine Organic Industries on September 4, 2024 and sell it today you would lose (13,660) from holding Fine Organic Industries or give up 2.57% of portfolio value over 90 days.

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

Fine Organic Industries  vs.  Indian Card Clothing

Fine Organic Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fine Organic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Indian Card Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Card Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Fine Organic and Indian Card

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

The idea behind Fine Organic Industries and Indian Card Clothing 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.