Correlation Between Axis Bank and Heavitree Brewery

Can any of the company-specific risk be diversified away by investing in both Axis Bank and Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery, you can compare the effects of market volatilities on Axis Bank and Heavitree Brewery 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 Heavitree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axis Bank and Heavitree Brewery.

Diversification Opportunities for Axis Bank and Heavitree Brewery

-0.48

Correlation Coefficient

Axis Bank  Heavitree Brewery

Very good diversification

The 3 months correlation between Axis and Heavitree is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Axis Bank Ltd and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery 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 Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Axis Bank i.e., Axis Bank and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Axis Bank and Heavitree Brewery

Assuming the 90 days trading horizon Axis Bank Ltd is expected to under-perform the Heavitree Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Axis Bank Ltd is 1.25 times less risky than Heavitree Brewery. The stock trades about -0.04 of its potential returns per unit of risk. The Heavitree Brewery is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  25,474  in Heavitree Brewery on April 21, 2025 and sell it today you would lose (3,974) from holding Heavitree Brewery or give up 15.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Axis Bank Ltd  vs.  Heavitree Brewery

Axis Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axis Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axis Bank and Heavitree Brewery

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

The idea behind Axis Bank Ltd and Heavitree Brewery 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.