Correlation Between Apollo Food and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both Apollo Food and Melewar Industrial 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 Apollo Food and Melewar Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Food Holdings and Melewar Industrial Group, you can compare the effects of market volatilities on Apollo Food and Melewar Industrial 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 Apollo Food with a short position of Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Food and Melewar Industrial.
Diversification Opportunities for Apollo Food and Melewar Industrial
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apollo and Melewar is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Food Holdings and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial and Apollo Food 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 Apollo Food Holdings are associated (or correlated) with Melewar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melewar Industrial has no effect on the direction of Apollo Food i.e., Apollo Food and Melewar Industrial go up and down completely randomly.
Pair Corralation between Apollo Food and Melewar Industrial
Assuming the 90 days trading horizon Apollo Food Holdings is expected to generate 0.73 times more return on investment than Melewar Industrial. However, Apollo Food Holdings is 1.37 times less risky than Melewar Industrial. It trades about 0.07 of its potential returns per unit of risk. Melewar Industrial Group is currently generating about -0.01 per unit of risk. If you would invest 472.00 in Apollo Food Holdings on August 27, 2024 and sell it today you would earn a total of 178.00 from holding Apollo Food Holdings or generate 37.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.17% |
| Values | Daily Returns |
Apollo Food Holdings vs. Melewar Industrial Group
Performance |
| Timeline |
| Apollo Food Holdings |
| Melewar Industrial |
Apollo Food and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Food and Melewar Industrial
The main advantage of trading using opposite Apollo Food and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Food position performs unexpectedly, Melewar Industrial 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 Melewar Industrial will offset losses from the drop in Melewar Industrial's long position.The idea behind Apollo Food Holdings and Melewar Industrial Group 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.| Melewar Industrial vs. Press Metal Bhd | Melewar Industrial vs. Southern Steel Bhd | Melewar Industrial vs. Eonmetall Group Bhd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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