Correlation Between Electrosteel Castings and Foods Inns

Can any of the company-specific risk be diversified away by investing in both Electrosteel Castings and Foods Inns 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 Electrosteel Castings and Foods Inns into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrosteel Castings Limited and Foods Inns Limited, you can compare the effects of market volatilities on Electrosteel Castings and Foods Inns 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 Electrosteel Castings with a short position of Foods Inns. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrosteel Castings and Foods Inns.

Diversification Opportunities for Electrosteel Castings and Foods Inns

0.79

Correlation Coefficient

Electrosteel Castings  Foods Inns

Poor diversification

The 3 months correlation between Electrosteel and Foods is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Electrosteel Castings Limited and Foods Inns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foods Inns Limited and Electrosteel Castings 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 Electrosteel Castings Limited are associated (or correlated) with Foods Inns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foods Inns Limited has no effect on the direction of Electrosteel Castings i.e., Electrosteel Castings and Foods Inns go up and down completely randomly.

Pair Corralation between Electrosteel Castings and Foods Inns

Assuming the 90 days trading horizon Electrosteel Castings is expected to generate 2.29 times less return on investment than Foods Inns. But when comparing it to its historical volatility, Electrosteel Castings Limited is 1.18 times less risky than Foods Inns. It trades about 0.06 of its potential returns per unit of risk. Foods Inns Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,921  in Foods Inns Limited on April 25, 2025 and sell it today you would earn a total of  2,451  from holding Foods Inns Limited or generate 27.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Electrosteel Castings Limited  vs.  Foods Inns Limited

Electrosteel Castings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrosteel Castings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrosteel Castings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Foods Inns Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foods Inns Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Foods Inns displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electrosteel Castings and Foods Inns

The main advantage of trading using opposite Electrosteel Castings and Foods Inns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrosteel Castings position performs unexpectedly, Foods Inns 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 Foods Inns will offset losses from the drop in Foods Inns' long position.

The idea behind Electrosteel Castings Limited and Foods Inns 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.

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.