Correlation Between Foods Inns and Vraj Iron

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

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

Diversification Opportunities for Foods Inns and Vraj Iron

0.46

Correlation Coefficient

Foods Inns  Vraj Iron

Very weak diversification

The 3 months correlation between Foods and Vraj is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Foods Inns Limited and Vraj Iron and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vraj Iron 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 Vraj Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vraj Iron has no effect on the direction of Foods Inns i.e., Foods Inns and Vraj Iron go up and down completely randomly.

Pair Corralation between Foods Inns and Vraj Iron

Assuming the 90 days trading horizon Foods Inns Limited is expected to generate 1.46 times more return on investment than Vraj Iron. However, Foods Inns is 1.46 times more volatile than Vraj Iron and. It trades about 0.12 of its potential returns per unit of risk. Vraj Iron and is currently generating about 0.08 per unit of risk. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Foods Inns Limited  vs.  Vraj Iron and

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.

Vraj Iron

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vraj Iron and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vraj Iron may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Foods Inns and Vraj Iron

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

The idea behind Foods Inns Limited and Vraj Iron and 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.