Correlation Between Apollo Hospitals and Golden Tobacco

Can any of the company-specific risk be diversified away by investing in both Apollo Hospitals and Golden Tobacco 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 Golden Tobacco 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 Golden Tobacco Limited, you can compare the effects of market volatilities on Apollo Hospitals and Golden Tobacco 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 Golden Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Hospitals and Golden Tobacco.

Diversification Opportunities for Apollo Hospitals and Golden Tobacco

0.21

Correlation Coefficient

Apollo Hospitals  Golden Tobacco

Modest diversification

The 3 months correlation between Apollo and Golden is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Hospitals Enterprise and Golden Tobacco Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Tobacco 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 Golden Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Tobacco has no effect on the direction of Apollo Hospitals i.e., Apollo Hospitals and Golden Tobacco go up and down completely randomly.

Pair Corralation between Apollo Hospitals and Golden Tobacco

Assuming the 90 days trading horizon Apollo Hospitals Enterprise is expected to generate 0.48 times more return on investment than Golden Tobacco. However, Apollo Hospitals Enterprise is 2.06 times less risky than Golden Tobacco. It trades about -0.12 of its potential returns per unit of risk. Golden Tobacco Limited is currently generating about -0.06 per unit of risk. If you would invest  730,392  in Apollo Hospitals Enterprise on December 28, 2024 and sell it today you would lose (81,187) from holding Apollo Hospitals Enterprise or give up 11.12% of portfolio value over 90 days.

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

Apollo Hospitals Enterprise  vs.  Golden Tobacco Limited

Apollo Hospitals Ent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Hospitals Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Golden Tobacco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Tobacco Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apollo Hospitals and Golden Tobacco

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

The idea behind Apollo Hospitals Enterprise and Golden Tobacco 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.