Correlation Between Guangdong Investment and Axis Bank
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Axis Bank 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 Guangdong Investment and Axis Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Axis Bank Limited, you can compare the effects of market volatilities on Guangdong Investment and Axis Bank 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 Guangdong Investment with a short position of Axis Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Axis Bank.
Diversification Opportunities for Guangdong Investment and Axis Bank
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Axis is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Axis Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank Limited and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank Limited has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Axis Bank go up and down completely randomly.
Pair Corralation between Guangdong Investment and Axis Bank
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.08 times more return on investment than Axis Bank. However, Guangdong Investment is 2.08 times more volatile than Axis Bank Limited. It trades about 0.22 of its potential returns per unit of risk. Axis Bank Limited is currently generating about -0.25 per unit of risk. If you would invest 55.00 in Guangdong Investment Limited on October 23, 2024 and sell it today you would earn a total of 16.00 from holding Guangdong Investment Limited or generate 29.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Axis Bank Limited
Performance |
| Timeline |
| Guangdong Investment |
| Axis Bank Limited |
Guangdong Investment and Axis Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Axis Bank
The main advantage of trading using opposite Guangdong Investment and Axis Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Axis Bank 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 Axis Bank will offset losses from the drop in Axis Bank's long position.| Guangdong Investment vs. FORMPIPE SOFTWARE AB | Guangdong Investment vs. USU Software AG | Guangdong Investment vs. CyberArk Software | Guangdong Investment vs. High Liner Foods |
| Axis Bank vs. Guangdong Investment Limited | Axis Bank vs. Virtus Investment Partners | Axis Bank vs. SOGECLAIR SA INH | Axis Bank vs. Westinghouse Air Brake |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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