Correlation Between AXISCADES Technologies and Agarwal Industrial

Can any of the company-specific risk be diversified away by investing in both AXISCADES Technologies and Agarwal Industrial 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 AXISCADES Technologies and Agarwal Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for AXISCADES Technologies and Agarwal Industrial

0.51

Correlation Coefficient

AXISCADES Technologies  Agarwal Industrial

Very weak diversification

The 3 months correlation between AXISCADES and Agarwal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AXISCADES Technologies Limited and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and AXISCADES Technologies 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 AXISCADES Technologies Limited are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of AXISCADES Technologies i.e., AXISCADES Technologies and Agarwal Industrial go up and down completely randomly.

Pair Corralation between AXISCADES Technologies and Agarwal Industrial

Assuming the 90 days trading horizon AXISCADES Technologies Limited is expected to generate 1.59 times more return on investment than Agarwal Industrial. However, AXISCADES Technologies is 1.59 times more volatile than Agarwal Industrial. It trades about 0.13 of its potential returns per unit of risk. Agarwal Industrial is currently generating about -0.26 per unit of risk. If you would invest  63,345  in AXISCADES Technologies Limited on October 27, 2024 and sell it today you would earn a total of  6,400  from holding AXISCADES Technologies Limited or generate 10.1% return on investment over 90 days.

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

AXISCADES Technologies Limited  vs.  Agarwal Industrial

AXISCADES Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXISCADES Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, AXISCADES Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Agarwal Industrial

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Agarwal Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AXISCADES Technologies and Agarwal Industrial

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

The idea behind AXISCADES Technologies Limited and Agarwal Industrial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.