Correlation Between Aarti Drugs and Hindustan Media

Can any of the company-specific risk be diversified away by investing in both Aarti Drugs and Hindustan Media 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 Aarti Drugs and Hindustan Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aarti Drugs Limited and Hindustan Media Ventures, you can compare the effects of market volatilities on Aarti Drugs and Hindustan Media 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 Aarti Drugs with a short position of Hindustan Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarti Drugs and Hindustan Media.

Diversification Opportunities for Aarti Drugs and Hindustan Media

0.31

Correlation Coefficient

Aarti Drugs  Hindustan Media

Weak diversification

The 3 months correlation between Aarti and Hindustan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aarti Drugs Limited and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures and Aarti Drugs 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 Aarti Drugs Limited are associated (or correlated) with Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of Aarti Drugs i.e., Aarti Drugs and Hindustan Media go up and down completely randomly.

Pair Corralation between Aarti Drugs and Hindustan Media

Assuming the 90 days trading horizon Aarti Drugs Limited is expected to under-perform the Hindustan Media. But the stock apears to be less risky and, when comparing its historical volatility, Aarti Drugs Limited is 2.36 times less risky than Hindustan Media. The stock trades about -0.28 of its potential returns per unit of risk. The Hindustan Media Ventures is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,121  in Hindustan Media Ventures on September 12, 2024 and sell it today you would earn a total of  368.00  from holding Hindustan Media Ventures or generate 4.03% return on investment over 90 days.

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

Aarti Drugs Limited  vs.  Hindustan Media Ventures

Aarti Drugs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aarti Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hindustan Media Ventures

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hindustan Media Ventures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hindustan Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aarti Drugs and Hindustan Media

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

The idea behind Aarti Drugs Limited and Hindustan Media Ventures 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.