Correlation Between Edelweiss Financial and Akme Fintrade

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

By analyzing existing cross correlation between Edelweiss Financial Services and Akme Fintrade India, you can compare the effects of market volatilities on Edelweiss Financial and Akme Fintrade 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 Edelweiss Financial with a short position of Akme Fintrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edelweiss Financial and Akme Fintrade.

Diversification Opportunities for Edelweiss Financial and Akme Fintrade

0.65

Correlation Coefficient

Edelweiss Financial  Akme Fintrade

Poor diversification

The 3 months correlation between Edelweiss and Akme is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Edelweiss Financial Services and Akme Fintrade India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akme Fintrade India and Edelweiss Financial 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 Edelweiss Financial Services are associated (or correlated) with Akme Fintrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akme Fintrade India has no effect on the direction of Edelweiss Financial i.e., Edelweiss Financial and Akme Fintrade go up and down completely randomly.

Pair Corralation between Edelweiss Financial and Akme Fintrade

Assuming the 90 days trading horizon Edelweiss Financial Services is expected to generate 1.23 times more return on investment than Akme Fintrade. However, Edelweiss Financial is 1.23 times more volatile than Akme Fintrade India. It trades about -0.02 of its potential returns per unit of risk. Akme Fintrade India is currently generating about -0.08 per unit of risk. If you would invest  14,063  in Edelweiss Financial Services on September 21, 2024 and sell it today you would lose (959.00) from holding Edelweiss Financial Services or give up 6.82% of portfolio value over 90 days.

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

Edelweiss Financial Services  vs.  Akme Fintrade India

Edelweiss Financial

Risk-Adjusted Performance

0 of 100

Weak

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

Akme Fintrade India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akme Fintrade India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Edelweiss Financial and Akme Fintrade

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

The idea behind Edelweiss Financial Services and Akme Fintrade India 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.