Correlation Between Bikaji Foods and LT Foods
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By analyzing existing cross correlation between Bikaji Foods International and LT Foods Limited, you can compare the effects of market volatilities on Bikaji Foods and LT 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 Bikaji Foods with a short position of LT Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bikaji Foods and LT Foods.
Diversification Opportunities for Bikaji Foods and LT Foods
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bikaji and LTFOODS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bikaji Foods International and LT Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Foods Limited and Bikaji Foods 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 Bikaji Foods International are associated (or correlated) with LT Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Foods Limited has no effect on the direction of Bikaji Foods i.e., Bikaji Foods and LT Foods go up and down completely randomly.
Pair Corralation between Bikaji Foods and LT Foods
Assuming the 90 days trading horizon Bikaji Foods is expected to generate 1.73 times less return on investment than LT Foods. But when comparing it to its historical volatility, Bikaji Foods International is 1.39 times less risky than LT Foods. It trades about 0.1 of its potential returns per unit of risk. LT Foods Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 16,096 in LT Foods Limited on August 31, 2024 and sell it today you would earn a total of 23,614 from holding LT Foods Limited or generate 146.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.83% |
| Values | Daily Returns |
Bikaji Foods International vs. LT Foods Limited
Performance |
| Timeline |
| Bikaji Foods Interna |
| LT Foods Limited |
Bikaji Foods and LT Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bikaji Foods and LT Foods
The main advantage of trading using opposite Bikaji Foods and LT Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bikaji Foods position performs unexpectedly, LT 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 LT Foods will offset losses from the drop in LT Foods' long position.| Bikaji Foods vs. MRF Limited | Bikaji Foods vs. Bosch Limited | Bikaji Foods vs. Bajaj Holdings Investment | Bikaji Foods vs. Vardhman Holdings Limited |
| LT Foods vs. MRF Limited | LT Foods vs. Bosch Limited | LT Foods vs. Bajaj Holdings Investment | LT Foods vs. Vardhman Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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