Correlation Between Aster DM and Entero Healthcare

Can any of the company-specific risk be diversified away by investing in both Aster DM and Entero Healthcare 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 Aster DM and Entero Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aster DM Healthcare and Entero Healthcare Solutions, you can compare the effects of market volatilities on Aster DM and Entero Healthcare 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 Aster DM with a short position of Entero Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aster DM and Entero Healthcare.

Diversification Opportunities for Aster DM and Entero Healthcare

0.47

Correlation Coefficient

Aster DM  Entero Healthcare

Very weak diversification

The 3 months correlation between Aster and Entero is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and Entero Healthcare Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entero Healthcare and Aster DM 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 Aster DM Healthcare are associated (or correlated) with Entero Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entero Healthcare has no effect on the direction of Aster DM i.e., Aster DM and Entero Healthcare go up and down completely randomly.

Pair Corralation between Aster DM and Entero Healthcare

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 1.15 times more return on investment than Entero Healthcare. However, Aster DM is 1.15 times more volatile than Entero Healthcare Solutions. It trades about 0.2 of its potential returns per unit of risk. Entero Healthcare Solutions is currently generating about 0.08 per unit of risk. If you would invest  40,585  in Aster DM Healthcare on October 5, 2024 and sell it today you would earn a total of  11,625  from holding Aster DM Healthcare or generate 28.64% return on investment over 90 days.

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

Aster DM Healthcare  vs.  Entero Healthcare Solutions

Aster DM Healthcare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Entero Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entero Healthcare Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Entero Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aster DM and Entero Healthcare

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

The idea behind Aster DM Healthcare and Entero Healthcare Solutions 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.