Correlation Between Akme Fintrade and Credo Brands

Can any of the company-specific risk be diversified away by investing in both Akme Fintrade and Credo Brands 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 Credo Brands 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 Credo Brands Marketing, you can compare the effects of market volatilities on Akme Fintrade and Credo Brands 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 Credo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akme Fintrade and Credo Brands.

Diversification Opportunities for Akme Fintrade and Credo Brands

0.76

Correlation Coefficient

Akme Fintrade  Credo Brands

Poor diversification

The 3 months correlation between Akme and Credo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Akme Fintrade India and Credo Brands Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Brands Marketing 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 Credo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Brands Marketing has no effect on the direction of Akme Fintrade i.e., Akme Fintrade and Credo Brands go up and down completely randomly.

Pair Corralation between Akme Fintrade and Credo Brands

Assuming the 90 days trading horizon Akme Fintrade India is expected to generate 2.06 times more return on investment than Credo Brands. However, Akme Fintrade is 2.06 times more volatile than Credo Brands Marketing. It trades about -0.17 of its potential returns per unit of risk. Credo Brands Marketing is currently generating about -0.38 per unit of risk. If you would invest  9,424  in Akme Fintrade India on October 25, 2024 and sell it today you would lose (1,419) from holding Akme Fintrade India or give up 15.06% of portfolio value over 90 days.

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

Akme Fintrade India  vs.  Credo Brands Marketing

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 fragile 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.

Credo Brands Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credo Brands Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Credo Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Akme Fintrade and Credo Brands

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

The idea behind Akme Fintrade India and Credo Brands Marketing 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 Global Correlations module to find global opportunities by holding instruments from different markets.