Correlation Between Megastar Foods and Prakash Steelage
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By analyzing existing cross correlation between Megastar Foods Limited and Prakash Steelage Limited, you can compare the effects of market volatilities on Megastar Foods and Prakash Steelage 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 Prakash Steelage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megastar Foods and Prakash Steelage.
Diversification Opportunities for Megastar Foods and Prakash Steelage
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Megastar and Prakash is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Megastar Foods Limited and Prakash Steelage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prakash Steelage 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 Prakash Steelage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prakash Steelage has no effect on the direction of Megastar Foods i.e., Megastar Foods and Prakash Steelage go up and down completely randomly.
Pair Corralation between Megastar Foods and Prakash Steelage
Assuming the 90 days trading horizon Megastar Foods Limited is expected to under-perform the Prakash Steelage. But the stock apears to be less risky and, when comparing its historical volatility, Megastar Foods Limited is 1.12 times less risky than Prakash Steelage. The stock trades about -0.07 of its potential returns per unit of risk. The Prakash Steelage Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 610.00 in Prakash Steelage Limited on September 3, 2024 and sell it today you would earn a total of 230.00 from holding Prakash Steelage Limited or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Megastar Foods Limited vs. Prakash Steelage Limited
Performance |
| Timeline |
| Megastar Foods |
| Prakash Steelage |
Megastar Foods and Prakash Steelage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megastar Foods and Prakash Steelage
The main advantage of trading using opposite Megastar Foods and Prakash Steelage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megastar Foods position performs unexpectedly, Prakash Steelage 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 Prakash Steelage will offset losses from the drop in Prakash Steelage's long position.| Megastar Foods vs. Tata Consultancy Services | Megastar Foods vs. Quess Corp Limited | Megastar Foods vs. Reliance Industries Limited | Megastar Foods vs. Infosys Limited |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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