Correlation Between Amira Nature and Lamb Weston

Can any of the company-specific risk be diversified away by investing in both Amira Nature and Lamb Weston 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 Lamb Weston 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 Lamb Weston Holdings, you can compare the effects of market volatilities on Amira Nature and Lamb Weston 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 Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amira Nature and Lamb Weston.

Diversification Opportunities for Amira Nature and Lamb Weston

0.47

Correlation Coefficient

Amira Nature  Lamb Weston

Very weak diversification

The 3 months correlation between Amira and Lamb is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amira Nature Foods and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings 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 Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Amira Nature i.e., Amira Nature and Lamb Weston go up and down completely randomly.

Pair Corralation between Amira Nature and Lamb Weston

If you would invest  0.01  in Amira Nature Foods on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Amira Nature Foods or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Amira Nature Foods  vs.  Lamb Weston Holdings

Amira Nature Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amira Nature Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Amira Nature is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lamb Weston Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lamb Weston Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amira Nature and Lamb Weston

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

The idea behind Amira Nature Foods and Lamb Weston Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.