Correlation Between Sapphire Foods and PI Industries

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

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

Diversification Opportunities for Sapphire Foods and PI Industries

0.58

Correlation Coefficient

Sapphire Foods  PI Industries

Very weak diversification

The 3 months correlation between Sapphire and PIIND is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sapphire Foods India and PI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Industries Limited and Sapphire 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 Sapphire Foods India are associated (or correlated) with PI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Industries Limited has no effect on the direction of Sapphire Foods i.e., Sapphire Foods and PI Industries go up and down completely randomly.

Pair Corralation between Sapphire Foods and PI Industries

Assuming the 90 days trading horizon Sapphire Foods is expected to generate 1.58 times less return on investment than PI Industries. In addition to that, Sapphire Foods is 1.41 times more volatile than PI Industries Limited. It trades about 0.06 of its total potential returns per unit of risk. PI Industries Limited is currently generating about 0.13 per unit of volatility. If you would invest  369,950  in PI Industries Limited on April 22, 2025 and sell it today you would earn a total of  42,140  from holding PI Industries Limited or generate 11.39% return on investment over 90 days.

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

Sapphire Foods India  vs.  PI Industries Limited

Sapphire Foods India

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapphire Foods India are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Sapphire Foods may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PI Industries Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PI Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, PI Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sapphire Foods and PI Industries

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

The idea behind Sapphire Foods India and PI Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.