Correlation Between Agritech and National Foods
Can any of the company-specific risk be diversified away by investing in both Agritech and National 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 Agritech and National Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agritech and National Foods, you can compare the effects of market volatilities on Agritech and National 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 Agritech with a short position of National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agritech and National Foods.
Diversification Opportunities for Agritech and National Foods
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Agritech and National is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Agritech and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Foods and Agritech 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 Agritech are associated (or correlated) with National Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Foods has no effect on the direction of Agritech i.e., Agritech and National Foods go up and down completely randomly.
Pair Corralation between Agritech and National Foods
Assuming the 90 days trading horizon Agritech is expected to generate 1.39 times less return on investment than National Foods. In addition to that, Agritech is 1.56 times more volatile than National Foods. It trades about 0.07 of its total potential returns per unit of risk. National Foods is currently generating about 0.15 per unit of volatility. If you would invest 16,711 in National Foods on August 25, 2024 and sell it today you would earn a total of 667.00 from holding National Foods or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agritech vs. National Foods
Performance |
| Timeline |
| Agritech |
| National Foods |
Agritech and National Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agritech and National Foods
The main advantage of trading using opposite Agritech and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agritech position performs unexpectedly, National 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 National Foods will offset losses from the drop in National Foods' long position.| Agritech vs. Matco Foods | Agritech vs. Unilever Pakistan Foods | Agritech vs. Big Bird Foods | Agritech vs. Habib Insurance |
| National Foods vs. Masood Textile Mills | National Foods vs. Fauji Foods | National Foods vs. KSB Pumps | National Foods vs. Mari Petroleum |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |