Correlation Between Megastar Foods and V Mart

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

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

Diversification Opportunities for Megastar Foods and V Mart

-0.12

Correlation Coefficient

Megastar Foods  V Mart

Good diversification

The 3 months correlation between Megastar and VMART is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Megastar Foods Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Megastar Foods i.e., Megastar Foods and V Mart go up and down completely randomly.

Pair Corralation between Megastar Foods and V Mart

Assuming the 90 days trading horizon Megastar Foods Limited is expected to generate 1.71 times more return on investment than V Mart. However, Megastar Foods is 1.71 times more volatile than V Mart Retail Limited. It trades about 0.14 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.06 per unit of risk. If you would invest  21,389  in Megastar Foods Limited on April 24, 2025 and sell it today you would earn a total of  6,556  from holding Megastar Foods Limited or generate 30.65% return on investment over 90 days.

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

Megastar Foods Limited  vs.  V Mart Retail Limited

Megastar Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Megastar Foods Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Megastar Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Megastar Foods and V Mart

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

The idea behind Megastar Foods Limited and V Mart Retail 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.