Correlation Between Akme Fintrade and Bajaj Finance

Can any of the company-specific risk be diversified away by investing in both Akme Fintrade and Bajaj Finance 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 Akme Fintrade and Bajaj Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Akme Fintrade and Bajaj Finance

0.91

Correlation Coefficient

Akme Fintrade  Bajaj Finance

Almost no diversification

The 3 months correlation between Akme and Bajaj is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Akme Fintrade India and Bajaj Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Finance Limited and Akme Fintrade 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 Akme Fintrade India are associated (or correlated) with Bajaj Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Finance Limited has no effect on the direction of Akme Fintrade i.e., Akme Fintrade and Bajaj Finance go up and down completely randomly.

Pair Corralation between Akme Fintrade and Bajaj Finance

Assuming the 90 days trading horizon Akme Fintrade India is expected to under-perform the Bajaj Finance. In addition to that, Akme Fintrade is 1.9 times more volatile than Bajaj Finance Limited. It trades about -0.06 of its total potential returns per unit of risk. Bajaj Finance Limited is currently generating about -0.02 per unit of volatility. If you would invest  734,575  in Bajaj Finance Limited on September 14, 2024 and sell it today you would lose (21,995) from holding Bajaj Finance Limited or give up 2.99% of portfolio value over 90 days.

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

Akme Fintrade India  vs.  Bajaj Finance Limited

Akme Fintrade India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akme Fintrade India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bajaj Finance Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bajaj Finance Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bajaj Finance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Akme Fintrade and Bajaj Finance

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

The idea behind Akme Fintrade India and Bajaj Finance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.