Correlation Between Agro Phos and Indraprastha Medical

Can any of the company-specific risk be diversified away by investing in both Agro Phos and Indraprastha Medical 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 Agro Phos and Indraprastha Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agro Phos India and Indraprastha Medical, you can compare the effects of market volatilities on Agro Phos and Indraprastha Medical 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 Agro Phos with a short position of Indraprastha Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Phos and Indraprastha Medical.

Diversification Opportunities for Agro Phos and Indraprastha Medical

-0.23

Correlation Coefficient

Agro Phos  Indraprastha Medical

Very good diversification

The 3 months correlation between Agro and Indraprastha is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Agro Phos India and Indraprastha Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indraprastha Medical and Agro Phos 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 Agro Phos India are associated (or correlated) with Indraprastha Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indraprastha Medical has no effect on the direction of Agro Phos i.e., Agro Phos and Indraprastha Medical go up and down completely randomly.

Pair Corralation between Agro Phos and Indraprastha Medical

Assuming the 90 days trading horizon Agro Phos India is expected to under-perform the Indraprastha Medical. But the stock apears to be less risky and, when comparing its historical volatility, Agro Phos India is 1.47 times less risky than Indraprastha Medical. The stock trades about -0.17 of its potential returns per unit of risk. The Indraprastha Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  51,145  in Indraprastha Medical on October 9, 2024 and sell it today you would earn a total of  1,250  from holding Indraprastha Medical or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Agro Phos India  vs.  Indraprastha Medical

Agro Phos India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agro Phos India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Indraprastha Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Indraprastha Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agro Phos and Indraprastha Medical

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

The idea behind Agro Phos India and Indraprastha Medical 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.