Correlation Between Organic Meat and Shifa International

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

By analyzing existing cross correlation between The Organic Meat and Shifa International Hospitals, you can compare the effects of market volatilities on Organic Meat and Shifa International 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 Organic Meat with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Organic Meat and Shifa International.

Diversification Opportunities for Organic Meat and Shifa International

-0.61

Correlation Coefficient

Organic Meat  Shifa International

Excellent diversification

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

Pair Corralation between Organic Meat and Shifa International

Assuming the 90 days trading horizon The Organic Meat is expected to under-perform the Shifa International. But the stock apears to be less risky and, when comparing its historical volatility, The Organic Meat is 1.65 times less risky than Shifa International. The stock trades about -0.08 of its potential returns per unit of risk. The Shifa International Hospitals is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  15,163  in Shifa International Hospitals on September 14, 2024 and sell it today you would earn a total of  25,143  from holding Shifa International Hospitals or generate 165.82% return on investment over 90 days.

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

The Organic Meat  vs.  Shifa International Hospitals

Organic Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Organic Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Shifa International

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shifa International Hospitals are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shifa International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Organic Meat and Shifa International

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

The idea behind The Organic Meat and Shifa International Hospitals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.