Correlation Between Aster DM and Shradha Infraprojects

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

Diversification Opportunities for Aster DM and Shradha Infraprojects

-0.05

Correlation Coefficient

Aster DM  Shradha Infraprojects

Good diversification

The 3 months correlation between Aster and Shradha is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and Shradha Infraprojects Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shradha Infraprojects 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 Shradha Infraprojects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shradha Infraprojects has no effect on the direction of Aster DM i.e., Aster DM and Shradha Infraprojects go up and down completely randomly.

Pair Corralation between Aster DM and Shradha Infraprojects

Assuming the 90 days trading horizon Aster DM is expected to generate 59.57 times less return on investment than Shradha Infraprojects. But when comparing it to its historical volatility, Aster DM Healthcare is 57.43 times less risky than Shradha Infraprojects. It trades about 0.11 of its potential returns per unit of risk. Shradha Infraprojects Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,281  in Shradha Infraprojects Limited on September 22, 2024 and sell it today you would earn a total of  1,808  from holding Shradha Infraprojects Limited or generate 28.79% return on investment over 90 days.

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

Aster DM Healthcare  vs.  Shradha Infraprojects Limited

Aster DM Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 8 (%) 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.

Shradha Infraprojects

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shradha Infraprojects Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Shradha Infraprojects sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aster DM and Shradha Infraprojects

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

The idea behind Aster DM Healthcare and Shradha Infraprojects 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.