Correlation Between Foods Inns and Megastar Foods
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By analyzing existing cross correlation between Foods Inns Limited and Megastar Foods Limited, you can compare the effects of market volatilities on Foods Inns and Megastar 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 Foods Inns with a short position of Megastar Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foods Inns and Megastar Foods.
Diversification Opportunities for Foods Inns and Megastar Foods
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foods and Megastar is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Foods Inns Limited and Megastar Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megastar Foods and Foods Inns 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 Foods Inns Limited are associated (or correlated) with Megastar Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megastar Foods has no effect on the direction of Foods Inns i.e., Foods Inns and Megastar Foods go up and down completely randomly.
Pair Corralation between Foods Inns and Megastar Foods
Assuming the 90 days trading horizon Foods Inns Limited is expected to under-perform the Megastar Foods. But the stock apears to be less risky and, when comparing its historical volatility, Foods Inns Limited is 1.01 times less risky than Megastar Foods. The stock trades about -0.05 of its potential returns per unit of risk. The Megastar Foods Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 29,425 in Megastar Foods Limited on September 1, 2024 and sell it today you would lose (7,475) from holding Megastar Foods Limited or give up 25.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.25% |
| Values | Daily Returns |
Foods Inns Limited vs. Megastar Foods Limited
Performance |
| Timeline |
| Foods Inns Limited |
| Megastar Foods |
Foods Inns and Megastar Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foods Inns and Megastar Foods
The main advantage of trading using opposite Foods Inns and Megastar Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foods Inns position performs unexpectedly, Megastar 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 Megastar Foods will offset losses from the drop in Megastar Foods' long position.| Foods Inns vs. Cholamandalam Investment and | Foods Inns vs. MEDI ASSIST HEALTHCARE | Foods Inns vs. 21st Century Management | Foods Inns vs. Medplus Health Services |
| Megastar Foods vs. Kingfa Science Technology | Megastar Foods vs. Rico Auto Industries | Megastar Foods vs. GACM Technologies Limited | Megastar Foods vs. COSMO FIRST 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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