Correlation Between Bajaj Finance and Akme Fintrade

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

Diversification Opportunities for Bajaj Finance and Akme Fintrade

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bajaj and Akme is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Finance Limited 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 Bajaj Finance 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 Bajaj Finance Limited 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 Bajaj Finance i.e., Bajaj Finance and Akme Fintrade go up and down completely randomly.

Pair Corralation between Bajaj Finance and Akme Fintrade

Assuming the 90 days trading horizon Bajaj Finance Limited is expected to generate 0.48 times more return on investment than Akme Fintrade. However, Bajaj Finance Limited is 2.1 times less risky than Akme Fintrade. It trades about 0.14 of its potential returns per unit of risk. Akme Fintrade India is currently generating about -0.05 per unit of risk. If you would invest  684,370  in Bajaj Finance Limited on November 2, 2024 and sell it today you would earn a total of  105,795  from holding Bajaj Finance Limited or generate 15.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bajaj Finance Limited  vs.  Akme Fintrade India

 Performance 
       Timeline  
Bajaj Finance Limited 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Finance Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bajaj Finance sustained solid returns over the last few months and may actually be approaching a breakup point.
Akme Fintrade India 

Risk-Adjusted Performance

0 of 100

 
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 inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bajaj Finance and Akme Fintrade Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bajaj Finance and Akme Fintrade

The main advantage of trading using opposite Bajaj Finance and Akme Fintrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Finance 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.
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The idea behind Bajaj Finance Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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