Correlation Between Asiri Surgical and Renuka Agri

Can any of the company-specific risk be diversified away by investing in both Asiri Surgical and Renuka Agri 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 Asiri Surgical and Renuka Agri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asiri Surgical Hospital and Renuka Agri Foods, you can compare the effects of market volatilities on Asiri Surgical and Renuka Agri 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 Asiri Surgical with a short position of Renuka Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiri Surgical and Renuka Agri.

Diversification Opportunities for Asiri Surgical and Renuka Agri

-0.11

Correlation Coefficient

Asiri Surgical  Renuka Agri

Good diversification

The 3 months correlation between Asiri and Renuka is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Asiri Surgical Hospital and Renuka Agri Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renuka Agri Foods and Asiri Surgical 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 Asiri Surgical Hospital are associated (or correlated) with Renuka Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renuka Agri Foods has no effect on the direction of Asiri Surgical i.e., Asiri Surgical and Renuka Agri go up and down completely randomly.

Pair Corralation between Asiri Surgical and Renuka Agri

Assuming the 90 days trading horizon Asiri Surgical Hospital is expected to generate 0.72 times more return on investment than Renuka Agri. However, Asiri Surgical Hospital is 1.39 times less risky than Renuka Agri. It trades about 0.09 of its potential returns per unit of risk. Renuka Agri Foods is currently generating about 0.05 per unit of risk. If you would invest  1,110  in Asiri Surgical Hospital on September 27, 2024 and sell it today you would earn a total of  110.00  from holding Asiri Surgical Hospital or generate 9.91% return on investment over 90 days.

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

Asiri Surgical Hospital  vs.  Renuka Agri Foods

Asiri Surgical Hospital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asiri Surgical Hospital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asiri Surgical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Renuka Agri Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renuka Agri Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renuka Agri may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Asiri Surgical and Renuka Agri

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

The idea behind Asiri Surgical Hospital and Renuka Agri Foods 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..