Correlation Between Megastar Foods and GM Breweries
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By analyzing existing cross correlation between Megastar Foods Limited and GM Breweries Limited, you can compare the effects of market volatilities on Megastar Foods and GM Breweries 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 Megastar Foods with a short position of GM Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megastar Foods and GM Breweries.
Diversification Opportunities for Megastar Foods and GM Breweries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Megastar and GMBREW is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Megastar Foods Limited and GM Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GM Breweries Limited and Megastar 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 Megastar Foods Limited are associated (or correlated) with GM Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GM Breweries Limited has no effect on the direction of Megastar Foods i.e., Megastar Foods and GM Breweries go up and down completely randomly.
Pair Corralation between Megastar Foods and GM Breweries
Assuming the 90 days trading horizon Megastar Foods Limited is expected to generate 1.49 times more return on investment than GM Breweries. However, Megastar Foods is 1.49 times more volatile than GM Breweries Limited. It trades about -0.1 of its potential returns per unit of risk. GM Breweries Limited is currently generating about -0.19 per unit of risk. If you would invest 27,335 in Megastar Foods Limited on November 5, 2024 and sell it today you would lose (2,347) from holding Megastar Foods Limited or give up 8.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Megastar Foods Limited vs. GM Breweries Limited
Performance |
| Timeline |
| Megastar Foods |
| GM Breweries Limited |
Megastar Foods and GM Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megastar Foods and GM Breweries
The main advantage of trading using opposite Megastar Foods and GM Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megastar Foods position performs unexpectedly, GM Breweries 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 GM Breweries will offset losses from the drop in GM Breweries' long position.| Megastar Foods vs. Sportking India Limited | Megastar Foods vs. Zee Entertainment Enterprises | Megastar Foods vs. NRB Industrial Bearings | Megastar Foods vs. Hisar Metal Industries |
| GM Breweries vs. Samhi Hotels Limited | GM Breweries vs. Blue Coast Hotels | GM Breweries vs. Juniper Hotels | GM Breweries vs. RBL Bank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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