Correlation Between MEDIPAL HOLDINGS and Prestige Consumer

Can any of the company-specific risk be diversified away by investing in both MEDIPAL HOLDINGS and Prestige Consumer 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 MEDIPAL HOLDINGS and Prestige Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEDIPAL HOLDINGS P and Prestige Consumer Healthcare, you can compare the effects of market volatilities on MEDIPAL HOLDINGS and Prestige Consumer 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 MEDIPAL HOLDINGS with a short position of Prestige Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIPAL HOLDINGS and Prestige Consumer.

Diversification Opportunities for MEDIPAL HOLDINGS and Prestige Consumer

-0.24

Correlation Coefficient

MEDIPAL HOLDINGS  Prestige Consumer

Very good diversification

The 3 months correlation between MEDIPAL and Prestige is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding MEDIPAL HOLDINGS P and Prestige Consumer Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Consumer and MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS P are associated (or correlated) with Prestige Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Consumer has no effect on the direction of MEDIPAL HOLDINGS i.e., MEDIPAL HOLDINGS and Prestige Consumer go up and down completely randomly.

Pair Corralation between MEDIPAL HOLDINGS and Prestige Consumer

Assuming the 90 days horizon MEDIPAL HOLDINGS is expected to generate 11.64 times less return on investment than Prestige Consumer. But when comparing it to its historical volatility, MEDIPAL HOLDINGS P is 1.8 times less risky than Prestige Consumer. It trades about 0.01 of its potential returns per unit of risk. Prestige Consumer Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,550  in Prestige Consumer Healthcare on December 27, 2024 and sell it today you would earn a total of  300.00  from holding Prestige Consumer Healthcare or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MEDIPAL HOLDINGS P  vs.  Prestige Consumer Healthcare

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEDIPAL HOLDINGS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MEDIPAL HOLDINGS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Prestige Consumer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Consumer Healthcare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Prestige Consumer is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MEDIPAL HOLDINGS and Prestige Consumer

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

The idea behind MEDIPAL HOLDINGS P and Prestige Consumer Healthcare 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.