Correlation Between Air Link and IBL HealthCare

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Can any of the company-specific risk be diversified away by investing in both Air Link and IBL HealthCare 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 Air Link and IBL HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Link Communication and IBL HealthCare, you can compare the effects of market volatilities on Air Link and IBL HealthCare 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 Air Link with a short position of IBL HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Link and IBL HealthCare.

Diversification Opportunities for Air Link and IBL HealthCare

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Air and IBL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air Link Communication and IBL HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBL HealthCare and Air Link 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 Air Link Communication are associated (or correlated) with IBL HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBL HealthCare has no effect on the direction of Air Link i.e., Air Link and IBL HealthCare go up and down completely randomly.

Pair Corralation between Air Link and IBL HealthCare

Assuming the 90 days trading horizon Air Link Communication is expected to generate 1.16 times more return on investment than IBL HealthCare. However, Air Link is 1.16 times more volatile than IBL HealthCare. It trades about 0.23 of its potential returns per unit of risk. IBL HealthCare is currently generating about 0.08 per unit of risk. If you would invest  8,562  in Air Link Communication on September 30, 2024 and sell it today you would earn a total of  13,012  from holding Air Link Communication or generate 151.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Air Link Communication  vs.  IBL HealthCare

 Performance 
       Timeline  
Air Link Communication 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Air Link Communication are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Air Link disclosed solid returns over the last few months and may actually be approaching a breakup point.
IBL HealthCare 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IBL HealthCare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, IBL HealthCare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Air Link and IBL HealthCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Link and IBL HealthCare

The main advantage of trading using opposite Air Link and IBL HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Link position performs unexpectedly, IBL HealthCare 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 IBL HealthCare will offset losses from the drop in IBL HealthCare's long position.
The idea behind Air Link Communication and IBL HealthCare 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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