Correlation Between ADHI KARYA and Bank of Nova Scotia

Can any of the company-specific risk be diversified away by investing in both ADHI KARYA and Bank of Nova Scotia 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 ADHI KARYA and Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADHI KARYA and The Bank of, you can compare the effects of market volatilities on ADHI KARYA and Bank of Nova Scotia 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 ADHI KARYA with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADHI KARYA and Bank of Nova Scotia.

Diversification Opportunities for ADHI KARYA and Bank of Nova Scotia

0.69

Correlation Coefficient

ADHI KARYA  Bank of Nova Scotia

Poor diversification

The 3 months correlation between ADHI and Bank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia and ADHI KARYA 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 ADHI KARYA are associated (or correlated) with Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of ADHI KARYA i.e., ADHI KARYA and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between ADHI KARYA and Bank of Nova Scotia

Assuming the 90 days trading horizon ADHI KARYA is expected to generate 13.37 times more return on investment than Bank of Nova Scotia. However, ADHI KARYA is 13.37 times more volatile than The Bank of. It trades about 0.0 of its potential returns per unit of risk. The Bank of is currently generating about -0.18 per unit of risk. If you would invest  0.95  in ADHI KARYA on December 20, 2024 and sell it today you would lose (0.45) from holding ADHI KARYA or give up 47.37% of portfolio value over 90 days.

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

ADHI KARYA  vs.  The Bank of

ADHI KARYA

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ADHI KARYA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of Nova Scotia

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ADHI KARYA and Bank of Nova Scotia

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

The idea behind ADHI KARYA and The Bank of 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.