Correlation Between Armada Hflr and Shifa International

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Shifa International 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 Armada Hflr and Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Shifa International Hospitals, you can compare the effects of market volatilities on Armada Hflr and Shifa International 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 Armada Hflr with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Shifa International.

Diversification Opportunities for Armada Hflr and Shifa International

-0.47

Correlation Coefficient

Armada Hflr  Shifa International

Very good diversification

The 3 months correlation between Armada and Shifa is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Armada Hflr i.e., Armada Hflr and Shifa International go up and down completely randomly.

Pair Corralation between Armada Hflr and Shifa International

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Shifa International. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 2.67 times less risky than Shifa International. The stock trades about -0.07 of its potential returns per unit of risk. The Shifa International Hospitals is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  15,559  in Shifa International Hospitals on September 13, 2024 and sell it today you would earn a total of  24,195  from holding Shifa International Hospitals or generate 155.5% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Shifa International Hospitals

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Shifa International

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shifa International Hospitals are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shifa International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Shifa International

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

The idea behind Armada Hflr Pr and Shifa International Hospitals 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.