Correlation Between Agarwal Industrial and Healthcare Global

Can any of the company-specific risk be diversified away by investing in both Agarwal Industrial and Healthcare Global 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 Agarwal Industrial and Healthcare Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agarwal Industrial and Healthcare Global Enterprises, you can compare the effects of market volatilities on Agarwal Industrial and Healthcare Global 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 Agarwal Industrial with a short position of Healthcare Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agarwal Industrial and Healthcare Global.

Diversification Opportunities for Agarwal Industrial and Healthcare Global

-0.72

Correlation Coefficient

Agarwal Industrial  Healthcare Global

Pay attention - limited upside

The 3 months correlation between Agarwal and Healthcare is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Healthcare Global Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Global and Agarwal Industrial 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 Agarwal Industrial are associated (or correlated) with Healthcare Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Global has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Healthcare Global go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Healthcare Global

Assuming the 90 days trading horizon Agarwal Industrial is expected to under-perform the Healthcare Global. In addition to that, Agarwal Industrial is 1.29 times more volatile than Healthcare Global Enterprises. It trades about -0.02 of its total potential returns per unit of risk. Healthcare Global Enterprises is currently generating about 0.24 per unit of volatility. If you would invest  38,685  in Healthcare Global Enterprises on August 31, 2024 and sell it today you would earn a total of  11,675  from holding Healthcare Global Enterprises or generate 30.18% return on investment over 90 days.

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

Agarwal Industrial  vs.  Healthcare Global Enterprises

Agarwal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Healthcare Global

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Global Enterprises are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Healthcare Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agarwal Industrial and Healthcare Global

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

The idea behind Agarwal Industrial and Healthcare Global Enterprises 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.