Correlation Between Apollo Hospitals and Dhanuka Agritech

Can any of the company-specific risk be diversified away by investing in both Apollo Hospitals and Dhanuka Agritech 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 Apollo Hospitals and Dhanuka Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Hospitals Enterprise and Dhanuka Agritech Limited, you can compare the effects of market volatilities on Apollo Hospitals and Dhanuka Agritech 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 Apollo Hospitals with a short position of Dhanuka Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Hospitals and Dhanuka Agritech.

Diversification Opportunities for Apollo Hospitals and Dhanuka Agritech

0.39

Correlation Coefficient

Apollo Hospitals  Dhanuka Agritech

Weak diversification

The 3 months correlation between Apollo and Dhanuka is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Hospitals Enterprise and Dhanuka Agritech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhanuka Agritech and Apollo Hospitals 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 Apollo Hospitals Enterprise are associated (or correlated) with Dhanuka Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhanuka Agritech has no effect on the direction of Apollo Hospitals i.e., Apollo Hospitals and Dhanuka Agritech go up and down completely randomly.

Pair Corralation between Apollo Hospitals and Dhanuka Agritech

Assuming the 90 days trading horizon Apollo Hospitals Enterprise is expected to generate 0.41 times more return on investment than Dhanuka Agritech. However, Apollo Hospitals Enterprise is 2.41 times less risky than Dhanuka Agritech. It trades about 0.24 of its potential returns per unit of risk. Dhanuka Agritech Limited is currently generating about -0.21 per unit of risk. If you would invest  712,655  in Apollo Hospitals Enterprise on October 4, 2024 and sell it today you would earn a total of  29,510  from holding Apollo Hospitals Enterprise or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Apollo Hospitals Enterprise  vs.  Dhanuka Agritech Limited

Apollo Hospitals Ent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dhanuka Agritech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dhanuka Agritech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apollo Hospitals and Dhanuka Agritech

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

The idea behind Apollo Hospitals Enterprise and Dhanuka Agritech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.