Correlation Between Axis Bank and Mahindra Mahindra
Can any of the company-specific risk be diversified away by investing in both Axis Bank and Mahindra Mahindra 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 Axis Bank and Mahindra Mahindra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axis Bank Ltd and Mahindra Mahindra Limited, you can compare the effects of market volatilities on Axis Bank and Mahindra Mahindra 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 Axis Bank with a short position of Mahindra Mahindra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axis Bank and Mahindra Mahindra.
Diversification Opportunities for Axis Bank and Mahindra Mahindra
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Axis and Mahindra is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Axis Bank Ltd and Mahindra Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahindra Mahindra and Axis Bank 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 Axis Bank Ltd are associated (or correlated) with Mahindra Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahindra Mahindra has no effect on the direction of Axis Bank i.e., Axis Bank and Mahindra Mahindra go up and down completely randomly.
Pair Corralation between Axis Bank and Mahindra Mahindra
Assuming the 90 days trading horizon Axis Bank Ltd is expected to under-perform the Mahindra Mahindra. But the stock apears to be less risky and, when comparing its historical volatility, Axis Bank Ltd is 1.57 times less risky than Mahindra Mahindra. The stock trades about -0.13 of its potential returns per unit of risk. The Mahindra Mahindra Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,330 in Mahindra Mahindra Limited on August 27, 2024 and sell it today you would earn a total of 260.00 from holding Mahindra Mahindra Limited or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axis Bank Ltd vs. Mahindra Mahindra Limited
Performance |
| Timeline |
| Axis Bank |
| Mahindra Mahindra |
Axis Bank and Mahindra Mahindra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axis Bank and Mahindra Mahindra
The main advantage of trading using opposite Axis Bank and Mahindra Mahindra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axis Bank position performs unexpectedly, Mahindra Mahindra 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 Mahindra Mahindra will offset losses from the drop in Mahindra Mahindra's long position.| Axis Bank vs. State Bank of | Axis Bank vs. Reliance Industries Limited | Axis Bank vs. Larsen Toubro Limited | Axis Bank vs. Tata Steel Limited |
| Mahindra Mahindra vs. Larsen Toubro Limited | Mahindra Mahindra vs. State Bank of | Mahindra Mahindra vs. Reliance Industries Limited | Mahindra Mahindra vs. Axis Bank Ltd |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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