Correlation Between Allied Blenders and Hexa Tradex

Can any of the company-specific risk be diversified away by investing in both Allied Blenders and Hexa Tradex 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 Allied Blenders and Hexa Tradex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allied Blenders Distillers and Hexa Tradex Limited, you can compare the effects of market volatilities on Allied Blenders and Hexa Tradex 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 Allied Blenders with a short position of Hexa Tradex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Blenders and Hexa Tradex.

Diversification Opportunities for Allied Blenders and Hexa Tradex

0.68

Correlation Coefficient

Allied Blenders  Hexa Tradex

Poor diversification

The 3 months correlation between Allied and Hexa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Allied Blenders Distillers and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited and Allied Blenders 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 Allied Blenders Distillers are associated (or correlated) with Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of Allied Blenders i.e., Allied Blenders and Hexa Tradex go up and down completely randomly.

Pair Corralation between Allied Blenders and Hexa Tradex

Assuming the 90 days trading horizon Allied Blenders Distillers is expected to generate 0.7 times more return on investment than Hexa Tradex. However, Allied Blenders Distillers is 1.44 times less risky than Hexa Tradex. It trades about -0.17 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about -0.14 per unit of risk. If you would invest  42,240  in Allied Blenders Distillers on December 25, 2024 and sell it today you would lose (10,485) from holding Allied Blenders Distillers or give up 24.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Allied Blenders Distillers  vs.  Hexa Tradex Limited

Allied Blenders Dist

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allied Blenders Distillers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hexa Tradex Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Allied Blenders and Hexa Tradex

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

The idea behind Allied Blenders Distillers and Hexa Tradex 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.