Correlation Between Sanbo Hospital and NAURA Technology

Can any of the company-specific risk be diversified away by investing in both Sanbo Hospital and NAURA Technology 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 Sanbo Hospital and NAURA Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sanbo Hospital Management and NAURA Technology Group, you can compare the effects of market volatilities on Sanbo Hospital and NAURA Technology 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 Sanbo Hospital with a short position of NAURA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanbo Hospital and NAURA Technology.

Diversification Opportunities for Sanbo Hospital and NAURA Technology

0.79

Correlation Coefficient

Sanbo Hospital  NAURA Technology

Poor diversification

The 3 months correlation between Sanbo and NAURA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Sanbo Hospital 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 Sanbo Hospital Management are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and NAURA Technology go up and down completely randomly.

Pair Corralation between Sanbo Hospital and NAURA Technology

Assuming the 90 days trading horizon Sanbo Hospital is expected to generate 4.58 times less return on investment than NAURA Technology. In addition to that, Sanbo Hospital is 1.46 times more volatile than NAURA Technology Group. It trades about 0.01 of its total potential returns per unit of risk. NAURA Technology Group is currently generating about 0.09 per unit of volatility. If you would invest  22,625  in NAURA Technology Group on October 6, 2024 and sell it today you would earn a total of  14,885  from holding NAURA Technology Group or generate 65.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sanbo Hospital Management  vs.  NAURA Technology Group

Sanbo Hospital Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanbo Hospital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sanbo Hospital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NAURA Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAURA Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NAURA Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sanbo Hospital and NAURA Technology

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

The idea behind Sanbo Hospital Management and NAURA Technology Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.