Correlation Between Apollo Hospitals and Jindal Steel

Can any of the company-specific risk be diversified away by investing in both Apollo Hospitals and Jindal 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 Apollo Hospitals and Jindal Steel 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 Jindal Steel Power, you can compare the effects of market volatilities on Apollo Hospitals and Jindal 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 Apollo Hospitals with a short position of Jindal Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Hospitals and Jindal Steel.

Diversification Opportunities for Apollo Hospitals and Jindal Steel

0.33

Correlation Coefficient

Apollo Hospitals  Jindal Steel

Weak diversification

The 3 months correlation between Apollo and Jindal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Hospitals Enterprise and Jindal Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Steel Power 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 Jindal Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Steel Power has no effect on the direction of Apollo Hospitals i.e., Apollo Hospitals and Jindal Steel go up and down completely randomly.

Pair Corralation between Apollo Hospitals and Jindal Steel

Assuming the 90 days trading horizon Apollo Hospitals is expected to generate 1.01 times less return on investment than Jindal Steel. But when comparing it to its historical volatility, Apollo Hospitals Enterprise is 1.4 times less risky than Jindal Steel. It trades about 0.08 of its potential returns per unit of risk. Jindal Steel Power is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  58,859  in Jindal Steel Power on September 27, 2024 and sell it today you would earn a total of  35,411  from holding Jindal Steel Power or generate 60.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Apollo Hospitals Enterprise  vs.  Jindal Steel Power

Apollo Hospitals Ent

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Apollo Hospitals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Jindal Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Jindal Steel

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

The idea behind Apollo Hospitals Enterprise and Jindal Steel Power 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.