Correlation Between Gaztransport and Axis Bank

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

By analyzing existing cross correlation between Gaztransport et Technigaz and Axis Bank Ltd, you can compare the effects of market volatilities on Gaztransport and Axis Bank 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 Gaztransport with a short position of Axis Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and Axis Bank.

Diversification Opportunities for Gaztransport and Axis Bank

-0.43

Correlation Coefficient

Gaztransport  Axis Bank

Very good diversification

The 3 months correlation between Gaztransport and Axis is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Axis Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank has no effect on the direction of Gaztransport i.e., Gaztransport and Axis Bank go up and down completely randomly.

Pair Corralation between Gaztransport and Axis Bank

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 0.91 times more return on investment than Axis Bank. However, Gaztransport et Technigaz is 1.09 times less risky than Axis Bank. It trades about 0.05 of its potential returns per unit of risk. Axis Bank Ltd is currently generating about -0.19 per unit of risk. If you would invest  12,356  in Gaztransport et Technigaz on September 27, 2024 and sell it today you would earn a total of  474.00  from holding Gaztransport et Technigaz or generate 3.84% return on investment over 90 days.

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

Gaztransport et Technigaz  vs.  Axis Bank Ltd

Gaztransport et Technigaz

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Axis Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axis Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gaztransport and Axis Bank

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

The idea behind Gaztransport et Technigaz and Axis Bank Ltd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.