Correlation Between Akums Drugs and Golden Tobacco

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

Diversification Opportunities for Akums Drugs and Golden Tobacco

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Akums and Golden is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Akums Drugs and and Golden Tobacco Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Tobacco and Akums Drugs 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 Akums Drugs and are associated (or correlated) with Golden Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Tobacco has no effect on the direction of Akums Drugs i.e., Akums Drugs and Golden Tobacco go up and down completely randomly.

Pair Corralation between Akums Drugs and Golden Tobacco

Assuming the 90 days trading horizon Akums Drugs and is expected to under-perform the Golden Tobacco. In addition to that, Akums Drugs is 1.37 times more volatile than Golden Tobacco Limited. It trades about -0.05 of its total potential returns per unit of risk. Golden Tobacco Limited is currently generating about -0.03 per unit of volatility. If you would invest  6,580  in Golden Tobacco Limited on October 11, 2024 and sell it today you would lose (2,640) from holding Golden Tobacco Limited or give up 40.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy22.18%
ValuesDaily Returns

Akums Drugs and  vs.  Golden Tobacco Limited

 Performance 
       Timeline  
Akums Drugs 

Risk-Adjusted Performance

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Over the last 90 days Akums Drugs and 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Golden Tobacco 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Golden Tobacco Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Akums Drugs and Golden Tobacco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Akums Drugs and Golden Tobacco

The main advantage of trading using opposite Akums Drugs and Golden Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akums Drugs position performs unexpectedly, Golden Tobacco 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 Golden Tobacco will offset losses from the drop in Golden Tobacco's long position.
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The idea behind Akums Drugs and and Golden Tobacco 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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