Correlation Between Coffee Day and Visa Steel

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Can any of the company-specific risk be diversified away by investing in both Coffee Day and Visa Steel 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 Coffee Day and Visa Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Day Enterprises and Visa Steel Limited, you can compare the effects of market volatilities on Coffee Day and Visa Steel 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 Coffee Day with a short position of Visa Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Day and Visa Steel.

Diversification Opportunities for Coffee Day and Visa Steel

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Coffee and Visa is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and Visa Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Steel Limited and Coffee Day 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 Coffee Day Enterprises are associated (or correlated) with Visa Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Steel Limited has no effect on the direction of Coffee Day i.e., Coffee Day and Visa Steel go up and down completely randomly.

Pair Corralation between Coffee Day and Visa Steel

Assuming the 90 days trading horizon Coffee Day Enterprises is expected to under-perform the Visa Steel. In addition to that, Coffee Day is 1.1 times more volatile than Visa Steel Limited. It trades about -0.1 of its total potential returns per unit of risk. Visa Steel Limited is currently generating about 0.1 per unit of volatility. If you would invest  2,120  in Visa Steel Limited on November 3, 2024 and sell it today you would earn a total of  1,778  from holding Visa Steel Limited or generate 83.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

Coffee Day Enterprises  vs.  Visa Steel Limited

 Performance 
       Timeline  
Coffee Day Enterprises 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coffee Day Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Visa Steel Limited 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Steel Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Visa Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coffee Day and Visa Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coffee Day and Visa Steel

The main advantage of trading using opposite Coffee Day and Visa Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Day position performs unexpectedly, Visa Steel 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 Visa Steel will offset losses from the drop in Visa Steel's long position.
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The idea behind Coffee Day Enterprises and Visa Steel 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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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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