Correlation Between Associated Alcohols and Tech Mahindra

Can any of the company-specific risk be diversified away by investing in both Associated Alcohols and Tech 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 Associated Alcohols and Tech Mahindra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Alcohols Breweries and Tech Mahindra Limited, you can compare the effects of market volatilities on Associated Alcohols and Tech 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 Associated Alcohols with a short position of Tech Mahindra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Alcohols and Tech Mahindra.

Diversification Opportunities for Associated Alcohols and Tech Mahindra

-0.42

Correlation Coefficient

Associated Alcohols  Tech Mahindra

Very good diversification

The 3 months correlation between Associated and Tech is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Associated Alcohols Breweries and Tech Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tech Mahindra Limited and Associated Alcohols 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 Associated Alcohols Breweries are associated (or correlated) with Tech Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tech Mahindra Limited has no effect on the direction of Associated Alcohols i.e., Associated Alcohols and Tech Mahindra go up and down completely randomly.

Pair Corralation between Associated Alcohols and Tech Mahindra

Assuming the 90 days trading horizon Associated Alcohols Breweries is expected to under-perform the Tech Mahindra. In addition to that, Associated Alcohols is 1.89 times more volatile than Tech Mahindra Limited. It trades about -0.07 of its total potential returns per unit of risk. Tech Mahindra Limited is currently generating about 0.11 per unit of volatility. If you would invest  141,927  in Tech Mahindra Limited on April 24, 2025 and sell it today you would earn a total of  12,793  from holding Tech Mahindra Limited or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Associated Alcohols Breweries  vs.  Tech Mahindra Limited

Associated Alcohols

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated Alcohols Breweries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Tech Mahindra Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tech Mahindra Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Tech Mahindra may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Associated Alcohols and Tech Mahindra

The main advantage of trading using opposite Associated Alcohols and Tech Mahindra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Alcohols position performs unexpectedly, Tech 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 Tech Mahindra will offset losses from the drop in Tech Mahindra's long position.

The idea behind Associated Alcohols Breweries and Tech Mahindra 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.