Correlation Between SBI Cards and Akme Fintrade

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Can any of the company-specific risk be diversified away by investing in both SBI Cards 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 SBI Cards and Akme Fintrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Cards and and Akme Fintrade India, you can compare the effects of market volatilities on SBI Cards 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 SBI Cards with a short position of Akme Fintrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Cards and Akme Fintrade.

Diversification Opportunities for SBI Cards and Akme Fintrade

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SBI and Akme is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SBI Cards and 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 SBI Cards 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 SBI Cards and 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 SBI Cards i.e., SBI Cards and Akme Fintrade go up and down completely randomly.

Pair Corralation between SBI Cards and Akme Fintrade

Assuming the 90 days trading horizon SBI Cards and is expected to generate 0.71 times more return on investment than Akme Fintrade. However, SBI Cards and is 1.41 times less risky than Akme Fintrade. It trades about -0.06 of its potential returns per unit of risk. Akme Fintrade India is currently generating about -0.22 per unit of risk. If you would invest  74,435  in SBI Cards and on September 2, 2024 and sell it today you would lose (4,375) from holding SBI Cards and or give up 5.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

SBI Cards and  vs.  Akme Fintrade India

 Performance 
       Timeline  
SBI Cards 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SBI Cards and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SBI Cards is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Akme Fintrade India 

Risk-Adjusted Performance

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Weak
 
Strong
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 weak 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.

SBI Cards and Akme Fintrade Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SBI Cards and Akme Fintrade

The main advantage of trading using opposite SBI Cards and Akme Fintrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Cards 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 SBI Cards and 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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