Correlation Between Amira Nature and Better Choice

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Can any of the company-specific risk be diversified away by investing in both Amira Nature and Better Choice 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 Amira Nature and Better Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amira Nature Foods and Better Choice, you can compare the effects of market volatilities on Amira Nature and Better Choice 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 Amira Nature with a short position of Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amira Nature and Better Choice.

Diversification Opportunities for Amira Nature and Better Choice

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Amira and Better is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Amira Nature Foods and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Amira Nature 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 Amira Nature Foods are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Amira Nature i.e., Amira Nature and Better Choice go up and down completely randomly.

Pair Corralation between Amira Nature and Better Choice

Assuming the 90 days horizon Amira Nature Foods is expected to under-perform the Better Choice. In addition to that, Amira Nature is 2.64 times more volatile than Better Choice. It trades about -0.16 of its total potential returns per unit of risk. Better Choice is currently generating about -0.03 per unit of volatility. If you would invest  273.00  in Better Choice on May 11, 2022 and sell it today you would lose (33.00)  from holding Better Choice or give up 12.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.56%
ValuesDaily Returns

Amira Nature Foods  vs.  Better Choice

 Performance (%) 
       Timeline  
Amira Nature Foods 
Amira Performance
0 of 100
Over the last 90 days Amira Nature Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in September 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Amira Price Channel

Better Choice 
Better Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Better Price Channel

Amira Nature and Better Choice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amira Nature and Better Choice

The main advantage of trading using opposite Amira Nature and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amira Nature position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.
The idea behind Amira Nature Foods and Better Choice 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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