Correlation Between Rico Auto and Akme Fintrade

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

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

Diversification Opportunities for Rico Auto and Akme Fintrade

0.9

Correlation Coefficient

Rico Auto  Akme Fintrade

Almost no diversification

The 3 months correlation between Rico and Akme is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries 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 Rico Auto 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 Rico Auto Industries 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 Rico Auto i.e., Rico Auto and Akme Fintrade go up and down completely randomly.

Pair Corralation between Rico Auto and Akme Fintrade

Assuming the 90 days trading horizon Rico Auto is expected to generate 3.53 times less return on investment than Akme Fintrade. But when comparing it to its historical volatility, Rico Auto Industries is 2.64 times less risky than Akme Fintrade. It trades about 0.22 of its potential returns per unit of risk. Akme Fintrade India is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  8,480  in Akme Fintrade India on September 16, 2024 and sell it today you would earn a total of  2,172  from holding Akme Fintrade India or generate 25.61% return on investment over 90 days.

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

Rico Auto Industries  vs.  Akme Fintrade India

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

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 latest conflicting performance, the Stock's basic 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 Rico Auto and Akme Fintrade

The main advantage of trading using opposite Rico Auto and Akme Fintrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rico Auto 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 Rico Auto Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.