Correlation Between Apollo Tyres and Aban Offshore

Can any of the company-specific risk be diversified away by investing in both Apollo Tyres and Aban Offshore 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 Apollo Tyres and Aban Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Tyres Limited and Aban Offshore Limited, you can compare the effects of market volatilities on Apollo Tyres and Aban Offshore 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 Apollo Tyres with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Tyres and Aban Offshore.

Diversification Opportunities for Apollo Tyres and Aban Offshore

0.68

Correlation Coefficient

Apollo Tyres  Aban Offshore

Poor diversification

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

Pair Corralation between Apollo Tyres and Aban Offshore

Assuming the 90 days trading horizon Apollo Tyres Limited is expected to under-perform the Aban Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Tyres Limited is 1.7 times less risky than Aban Offshore. The stock trades about -0.49 of its potential returns per unit of risk. The Aban Offshore Limited is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  6,483  in Aban Offshore Limited on October 21, 2024 and sell it today you would lose (812.00) from holding Aban Offshore Limited or give up 12.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Apollo Tyres Limited  vs.  Aban Offshore Limited

Apollo Tyres Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Tyres Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apollo Tyres and Aban Offshore

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

The idea behind Apollo Tyres Limited and Aban Offshore 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.