Correlation Between Coffee Day and Aptech

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

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

Diversification Opportunities for Coffee Day and Aptech

0.45

Correlation Coefficient

Coffee Day  Aptech

Very weak diversification

The 3 months correlation between Coffee and Aptech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and Coffee Day 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 Coffee Day Enterprises are associated (or correlated) with Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of Coffee Day i.e., Coffee Day and Aptech go up and down completely randomly.

Pair Corralation between Coffee Day and Aptech

Assuming the 90 days trading horizon Coffee Day is expected to generate 18.66 times less return on investment than Aptech. In addition to that, Coffee Day is 1.01 times more volatile than Aptech Limited. It trades about 0.0 of its total potential returns per unit of risk. Aptech Limited is currently generating about 0.03 per unit of volatility. If you would invest  18,219  in Aptech Limited on October 8, 2024 and sell it today you would earn a total of  128.00  from holding Aptech Limited or generate 0.7% return on investment over 90 days.

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

Coffee Day Enterprises  vs.  Aptech Limited

Coffee Day Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coffee Day Enterprises 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 fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Coffee Day and Aptech

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

The idea behind Coffee Day Enterprises and Aptech 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.