Correlation Between Apollo Hospitals and Hindustan Copper

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

Diversification Opportunities for Apollo Hospitals and Hindustan Copper

0.28

Correlation Coefficient

Apollo Hospitals  Hindustan Copper

Modest diversification

The 3 months correlation between Apollo and Hindustan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Hospitals Enterprise and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper 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 Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Apollo Hospitals i.e., Apollo Hospitals and Hindustan Copper go up and down completely randomly.

Pair Corralation between Apollo Hospitals and Hindustan Copper

Assuming the 90 days trading horizon Apollo Hospitals Enterprise is expected to generate 0.65 times more return on investment than Hindustan Copper. However, Apollo Hospitals Enterprise is 1.53 times less risky than Hindustan Copper. It trades about 0.04 of its potential returns per unit of risk. Hindustan Copper Limited is currently generating about -0.05 per unit of risk. If you would invest  693,090  in Apollo Hospitals Enterprise on September 4, 2024 and sell it today you would earn a total of  19,565  from holding Apollo Hospitals Enterprise or generate 2.82% return on investment over 90 days.

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

Apollo Hospitals Enterprise  vs.  Hindustan Copper Limited

Apollo Hospitals Ent

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Apollo Hospitals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Apollo Hospitals and Hindustan Copper

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

The idea behind Apollo Hospitals Enterprise and Hindustan Copper 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.