Correlation Between Aarti Drugs and Page Industries

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

Diversification Opportunities for Aarti Drugs and Page Industries

-0.52

Correlation Coefficient

Aarti Drugs  Page Industries

Excellent diversification

The 3 months correlation between Aarti and Page is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aarti Drugs Limited and Page Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Page Industries 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 Page Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Page Industries has no effect on the direction of Aarti Drugs i.e., Aarti Drugs and Page Industries go up and down completely randomly.

Pair Corralation between Aarti Drugs and Page Industries

Assuming the 90 days trading horizon Aarti Drugs Limited is expected to under-perform the Page Industries. In addition to that, Aarti Drugs is 1.37 times more volatile than Page Industries Limited. It trades about -0.11 of its total potential returns per unit of risk. Page Industries Limited is currently generating about 0.06 per unit of volatility. If you would invest  4,406,115  in Page Industries Limited on October 22, 2024 and sell it today you would earn a total of  203,640  from holding Page Industries Limited or generate 4.62% return on investment over 90 days.

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

Aarti Drugs Limited  vs.  Page Industries Limited

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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Page Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Page Industries Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Page Industries is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aarti Drugs and Page Industries

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

The idea behind Aarti Drugs Limited and Page Industries Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.