Correlation Between Better Choice and Amira Nature

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

Diversification Opportunities for Better Choice and Amira Nature

-0.08
  Correlation Coefficient

Good diversification

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

Pair Corralation between Better Choice and Amira Nature

Given the investment horizon of 90 days Better Choice is expected to generate 0.33 times more return on investment than Amira Nature. However, Better Choice is 3.04 times less risky than Amira Nature. It trades about 0.19 of its potential returns per unit of risk. Amira Nature Foods is currently generating about -0.22 per unit of risk. If you would invest  190.00  in Better Choice on May 11, 2022 and sell it today you would earn a total of  48.00  from holding Better Choice or generate 25.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Better Choice  vs.  Amira Nature Foods

 Performance (%) 
       Timeline  
Better Choice 
Better Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 5 (%) 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 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 and Amira Nature Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Better Choice and Amira Nature

The main advantage of trading using opposite Better Choice and Amira Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better Choice position performs unexpectedly, Amira Nature 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 Amira Nature will offset losses from the drop in Amira Nature's long position.
The idea behind Better Choice and Amira Nature Foods 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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