Correlation Between Agro Tech and MRF
Can any of the company-specific risk be diversified away by investing in both Agro Tech and MRF 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 Agro Tech and MRF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agro Tech Foods and MRF Limited, you can compare the effects of market volatilities on Agro Tech and MRF 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 Agro Tech with a short position of MRF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and MRF.
Diversification Opportunities for Agro Tech and MRF
Pay attention - limited upside
The 3 months correlation between Agro and MRF is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited and Agro Tech 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 Agro Tech Foods are associated (or correlated) with MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Agro Tech i.e., Agro Tech and MRF go up and down completely randomly.
Pair Corralation between Agro Tech and MRF
Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 2.21 times more return on investment than MRF. However, Agro Tech is 2.21 times more volatile than MRF Limited. It trades about 0.03 of its potential returns per unit of risk. MRF Limited is currently generating about 0.03 per unit of risk. If you would invest 86,997 in Agro Tech Foods on September 2, 2024 and sell it today you would earn a total of 6,818 from holding Agro Tech Foods or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Agro Tech Foods vs. MRF Limited
Performance |
| Timeline |
| Agro Tech Foods |
| MRF Limited |
Agro Tech and MRF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agro Tech and MRF
The main advantage of trading using opposite Agro Tech and MRF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agro Tech position performs unexpectedly, MRF 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 MRF will offset losses from the drop in MRF's long position.| Agro Tech vs. Steelcast Limited | Agro Tech vs. NMDC Steel Limited | Agro Tech vs. HDFC Life Insurance | Agro Tech vs. MSP Steel Power |
| MRF vs. Apollo Sindoori Hotels | MRF vs. Baazar Style Retail | MRF vs. Lemon Tree Hotels | MRF vs. Kamat Hotels Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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