Correlation Between Armada Hflr and SBI Cards

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and SBI Cards 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 Armada Hflr and SBI Cards into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and SBI Cards and, you can compare the effects of market volatilities on Armada Hflr and SBI Cards 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 Armada Hflr with a short position of SBI Cards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and SBI Cards.

Diversification Opportunities for Armada Hflr and SBI Cards

0.3

Correlation Coefficient

Armada Hflr  SBI Cards

Weak diversification

The 3 months correlation between Armada and SBI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and SBI Cards and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Cards and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with SBI Cards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Cards has no effect on the direction of Armada Hflr i.e., Armada Hflr and SBI Cards go up and down completely randomly.

Pair Corralation between Armada Hflr and SBI Cards

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the SBI Cards. In addition to that, Armada Hflr is 1.14 times more volatile than SBI Cards and. It trades about -0.26 of its total potential returns per unit of risk. SBI Cards and is currently generating about -0.21 per unit of volatility. If you would invest  71,190  in SBI Cards and on September 29, 2024 and sell it today you would lose (3,660) from holding SBI Cards and or give up 5.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Armada Hflr Pr  vs.  SBI Cards and

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

SBI Cards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Cards and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Armada Hflr and SBI Cards

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

The idea behind Armada Hflr Pr and SBI Cards and 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.