Correlation Between ILFS Investment and Aptech

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

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

Diversification Opportunities for ILFS Investment and Aptech

0.43

Correlation Coefficient

ILFS Investment  Aptech

Very weak diversification

The 3 months correlation between ILFS and Aptech is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and ILFS Investment 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 ILFS Investment Managers 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 ILFS Investment i.e., ILFS Investment and Aptech go up and down completely randomly.

Pair Corralation between ILFS Investment and Aptech

Assuming the 90 days trading horizon ILFS Investment Managers is expected to generate 0.87 times more return on investment than Aptech. However, ILFS Investment Managers is 1.16 times less risky than Aptech. It trades about -0.02 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.09 per unit of risk. If you would invest  1,163  in ILFS Investment Managers on September 30, 2024 and sell it today you would lose (57.00) from holding ILFS Investment Managers or give up 4.9% of portfolio value over 90 days.

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

ILFS Investment Managers  vs.  Aptech Limited

ILFS Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ILFS Investment Managers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the 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 fragile performance in the last few months, the Stock's fundamental 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 ILFS Investment and Aptech

The main advantage of trading using opposite ILFS Investment and Aptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ILFS Investment 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 ILFS Investment Managers 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.