Correlation Between Bharti Airtel and Aptech

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

By analyzing existing cross correlation between Bharti Airtel Limited and Aptech Limited, you can compare the effects of market volatilities on Bharti Airtel 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 Bharti Airtel with a short position of Aptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Aptech.

Diversification Opportunities for Bharti Airtel and Aptech

0.83

Correlation Coefficient

Bharti Airtel  Aptech

Very poor diversification

The 3 months correlation between Bharti and Aptech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and Bharti Airtel 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 Bharti Airtel Limited 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 Bharti Airtel i.e., Bharti Airtel and Aptech go up and down completely randomly.

Pair Corralation between Bharti Airtel and Aptech

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 0.52 times more return on investment than Aptech. However, Bharti Airtel Limited is 1.91 times less risky than Aptech. It trades about 0.06 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.03 per unit of risk. If you would invest  143,605  in Bharti Airtel Limited on September 26, 2024 and sell it today you would earn a total of  14,785  from holding Bharti Airtel Limited or generate 10.3% return on investment over 90 days.

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

Bharti Airtel Limited  vs.  Aptech Limited

Bharti Airtel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bharti Airtel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 Bharti Airtel and Aptech

The main advantage of trading using opposite Bharti Airtel and Aptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bharti Airtel 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 Bharti Airtel Limited 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.