Correlation Between Coffee Day and Ankit Metal

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

Diversification Opportunities for Coffee Day and Ankit Metal

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Coffee and Ankit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and Ankit Metal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ankit Metal Power and Coffee Day 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 Coffee Day Enterprises are associated (or correlated) with Ankit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ankit Metal Power has no effect on the direction of Coffee Day i.e., Coffee Day and Ankit Metal go up and down completely randomly.

Pair Corralation between Coffee Day and Ankit Metal

Assuming the 90 days trading horizon Coffee Day Enterprises is expected to under-perform the Ankit Metal. In addition to that, Coffee Day is 1.04 times more volatile than Ankit Metal Power. It trades about -0.15 of its total potential returns per unit of risk. Ankit Metal Power is currently generating about -0.01 per unit of volatility. If you would invest  375.00  in Ankit Metal Power on September 3, 2024 and sell it today you would lose (35.00) from holding Ankit Metal Power or give up 9.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.19%
ValuesDaily Returns

Coffee Day Enterprises  vs.  Ankit Metal Power

 Performance 
       Timeline  
Coffee Day Enterprises 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coffee Day Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Ankit Metal Power 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ankit Metal Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Coffee Day and Ankit Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coffee Day and Ankit Metal

The main advantage of trading using opposite Coffee Day and Ankit Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Day position performs unexpectedly, Ankit Metal 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 Ankit Metal will offset losses from the drop in Ankit Metal's long position.
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The idea behind Coffee Day Enterprises and Ankit Metal Power 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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