Correlation Between Varun Beverages and Aakash Exploration

Can any of the company-specific risk be diversified away by investing in both Varun Beverages and Aakash Exploration 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 Varun Beverages and Aakash Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Varun Beverages Limited and Aakash Exploration Services, you can compare the effects of market volatilities on Varun Beverages and Aakash Exploration 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 Varun Beverages with a short position of Aakash Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varun Beverages and Aakash Exploration.

Diversification Opportunities for Varun Beverages and Aakash Exploration

-0.58

Correlation Coefficient

Varun Beverages  Aakash Exploration

Excellent diversification

The 3 months correlation between Varun and Aakash is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited and Aakash Exploration Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aakash Exploration and Varun Beverages 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 Varun Beverages Limited are associated (or correlated) with Aakash Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aakash Exploration has no effect on the direction of Varun Beverages i.e., Varun Beverages and Aakash Exploration go up and down completely randomly.

Pair Corralation between Varun Beverages and Aakash Exploration

Assuming the 90 days trading horizon Varun Beverages Limited is expected to under-perform the Aakash Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Varun Beverages Limited is 2.5 times less risky than Aakash Exploration. The stock trades about -0.07 of its potential returns per unit of risk. The Aakash Exploration Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  874.00  in Aakash Exploration Services on April 24, 2025 and sell it today you would earn a total of  114.00  from holding Aakash Exploration Services or generate 13.04% return on investment over 90 days.

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

Varun Beverages Limited  vs.  Aakash Exploration Services

Varun Beverages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varun Beverages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Aakash Exploration

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aakash Exploration Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Aakash Exploration sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varun Beverages and Aakash Exploration

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

The idea behind Varun Beverages Limited and Aakash Exploration Services 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.