Correlation Between Coffee Day and AXISCADES Technologies

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

Diversification Opportunities for Coffee Day and AXISCADES Technologies

-0.42

Correlation Coefficient

Coffee Day  AXISCADES Technologies

Very good diversification

The 3 months correlation between Coffee and AXISCADES is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and AXISCADES Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXISCADES Technologies 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 AXISCADES Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXISCADES Technologies has no effect on the direction of Coffee Day i.e., Coffee Day and AXISCADES Technologies go up and down completely randomly.

Pair Corralation between Coffee Day and AXISCADES Technologies

Assuming the 90 days trading horizon Coffee Day is expected to generate 4.64 times less return on investment than AXISCADES Technologies. In addition to that, Coffee Day is 1.12 times more volatile than AXISCADES Technologies Limited. It trades about 0.07 of its total potential returns per unit of risk. AXISCADES Technologies Limited is currently generating about 0.39 per unit of volatility. If you would invest  57,650  in AXISCADES Technologies Limited on October 8, 2024 and sell it today you would earn a total of  14,535  from holding AXISCADES Technologies Limited or generate 25.21% return on investment over 90 days.

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

Coffee Day Enterprises  vs.  AXISCADES Technologies 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.

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 weak fundamental indicators, AXISCADES Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coffee Day and AXISCADES Technologies

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

The idea behind Coffee Day Enterprises and AXISCADES Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.