Correlation Between Rico Auto and Aptech

Can any of the company-specific risk be diversified away by investing in both Rico Auto 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 Rico Auto and Aptech 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 Aptech Limited, you can compare the effects of market volatilities on Rico Auto 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 Rico Auto with a short position of Aptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and Aptech.

Diversification Opportunities for Rico Auto and Aptech

0.8

Correlation Coefficient

Rico Auto  Aptech

Very poor diversification

The 3 months correlation between Rico and Aptech is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited 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 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 Rico Auto i.e., Rico Auto and Aptech go up and down completely randomly.

Pair Corralation between Rico Auto and Aptech

Assuming the 90 days trading horizon Rico Auto is expected to generate 1.11 times less return on investment than Aptech. In addition to that, Rico Auto is 1.46 times more volatile than Aptech Limited. It trades about 0.05 of its total potential returns per unit of risk. Aptech Limited is currently generating about 0.08 per unit of volatility. If you would invest  17,538  in Aptech Limited on October 6, 2024 and sell it today you would earn a total of  809.00  from holding Aptech Limited or generate 4.61% return on investment over 90 days.

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

Rico Auto Industries  vs.  Aptech Limited

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 comparatively stable basic indicators, Rico Auto is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest unsteady performance, the Stock's fundamental 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 Aptech

The main advantage of trading using opposite Rico Auto and Aptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rico Auto 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 Rico Auto Industries 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.