Correlation Between Akme Fintrade and Neogen Chemicals

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

Diversification Opportunities for Akme Fintrade and Neogen Chemicals

0.07

Correlation Coefficient

Akme Fintrade  Neogen Chemicals

Significant diversification

The 3 months correlation between Akme and Neogen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Akme Fintrade India and Neogen Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen Chemicals 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 Neogen Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen Chemicals has no effect on the direction of Akme Fintrade i.e., Akme Fintrade and Neogen Chemicals go up and down completely randomly.

Pair Corralation between Akme Fintrade and Neogen Chemicals

Assuming the 90 days trading horizon Akme Fintrade India is expected to generate 1.39 times more return on investment than Neogen Chemicals. However, Akme Fintrade is 1.39 times more volatile than Neogen Chemicals Limited. It trades about 0.23 of its potential returns per unit of risk. Neogen Chemicals Limited is currently generating about 0.22 per unit of risk. If you would invest  8,480  in Akme Fintrade India on September 19, 2024 and sell it today you would earn a total of  1,704  from holding Akme Fintrade India or generate 20.09% return on investment over 90 days.

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

Akme Fintrade India  vs.  Neogen Chemicals 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.

Neogen Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Akme Fintrade and Neogen Chemicals

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

The idea behind Akme Fintrade India and Neogen Chemicals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.