Correlation Between Total Transport and Patanjali Foods

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

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

Diversification Opportunities for Total Transport and Patanjali Foods

-0.58

Correlation Coefficient

Total Transport  Patanjali Foods

Excellent diversification

The 3 months correlation between Total and Patanjali is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Total Transport Systems and Patanjali Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patanjali Foods and Total Transport 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 Total Transport Systems are associated (or correlated) with Patanjali Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patanjali Foods has no effect on the direction of Total Transport i.e., Total Transport and Patanjali Foods go up and down completely randomly.

Pair Corralation between Total Transport and Patanjali Foods

Assuming the 90 days trading horizon Total Transport Systems is expected to under-perform the Patanjali Foods. In addition to that, Total Transport is 1.18 times more volatile than Patanjali Foods Limited. It trades about -0.11 of its total potential returns per unit of risk. Patanjali Foods Limited is currently generating about 0.05 per unit of volatility. If you would invest  166,242  in Patanjali Foods Limited on September 30, 2024 and sell it today you would earn a total of  8,613  from holding Patanjali Foods Limited or generate 5.18% return on investment over 90 days.

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

Total Transport Systems  vs.  Patanjali Foods Limited

Total Transport Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Total Transport Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Patanjali Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patanjali Foods Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Patanjali Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Total Transport and Patanjali Foods

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

The idea behind Total Transport Systems and Patanjali Foods Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.