Correlation Between Ankit Metal and Federal Bank

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

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

Diversification Opportunities for Ankit Metal and Federal Bank

-0.38

Correlation Coefficient

Ankit Metal  Federal Bank

Very good diversification

The 3 months correlation between Ankit and Federal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and The Federal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Bank and Ankit Metal 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 Ankit Metal Power are associated (or correlated) with Federal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Bank has no effect on the direction of Ankit Metal i.e., Ankit Metal and Federal Bank go up and down completely randomly.

Pair Corralation between Ankit Metal and Federal Bank

Assuming the 90 days trading horizon Ankit Metal Power is expected to under-perform the Federal Bank. In addition to that, Ankit Metal is 1.64 times more volatile than The Federal Bank. It trades about -0.08 of its total potential returns per unit of risk. The Federal Bank is currently generating about 0.1 per unit of volatility. If you would invest  18,787  in The Federal Bank on September 4, 2024 and sell it today you would earn a total of  2,121  from holding The Federal Bank or generate 11.29% return on investment over 90 days.

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

Ankit Metal Power  vs.  The Federal Bank

Ankit Metal Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ankit Metal Power 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 basic 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.

Federal Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Federal Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Federal Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ankit Metal and Federal Bank

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

The idea behind Ankit Metal Power and The Federal Bank 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.