Correlation Between Amrutanjan Health and Visa Steel

Can any of the company-specific risk be diversified away by investing in both Amrutanjan Health and Visa Steel 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 Amrutanjan Health and Visa Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amrutanjan Health Care and Visa Steel Limited, you can compare the effects of market volatilities on Amrutanjan Health and Visa Steel 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 Amrutanjan Health with a short position of Visa Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amrutanjan Health and Visa Steel.

Diversification Opportunities for Amrutanjan Health and Visa Steel

0.02

Correlation Coefficient

Amrutanjan Health  Visa Steel

Significant diversification

The 3 months correlation between Amrutanjan and Visa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Amrutanjan Health Care and Visa Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Steel Limited and Amrutanjan Health 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 Amrutanjan Health Care are associated (or correlated) with Visa Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Steel Limited has no effect on the direction of Amrutanjan Health i.e., Amrutanjan Health and Visa Steel go up and down completely randomly.

Pair Corralation between Amrutanjan Health and Visa Steel

Assuming the 90 days trading horizon Amrutanjan Health Care is expected to under-perform the Visa Steel. But the stock apears to be less risky and, when comparing its historical volatility, Amrutanjan Health Care is 1.33 times less risky than Visa Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Visa Steel Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,124  in Visa Steel Limited on September 24, 2024 and sell it today you would lose (42.00) from holding Visa Steel Limited or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Amrutanjan Health Care  vs.  Visa Steel Limited

Amrutanjan Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amrutanjan Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Amrutanjan Health is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Visa Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amrutanjan Health and Visa Steel

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

The idea behind Amrutanjan Health Care and Visa Steel 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.