Correlation Between Aster DM and Spandana Sphoorty

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

Diversification Opportunities for Aster DM and Spandana Sphoorty

-0.64

Correlation Coefficient

Aster DM  Spandana Sphoorty

Excellent diversification

The 3 months correlation between Aster and Spandana is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and Spandana Sphoorty Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spandana Sphoorty 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 Spandana Sphoorty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spandana Sphoorty has no effect on the direction of Aster DM i.e., Aster DM and Spandana Sphoorty go up and down completely randomly.

Pair Corralation between Aster DM and Spandana Sphoorty

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 0.64 times more return on investment than Spandana Sphoorty. However, Aster DM Healthcare is 1.56 times less risky than Spandana Sphoorty. It trades about 0.08 of its potential returns per unit of risk. Spandana Sphoorty Financial is currently generating about -0.1 per unit of risk. If you would invest  40,054  in Aster DM Healthcare on October 12, 2024 and sell it today you would earn a total of  11,471  from holding Aster DM Healthcare or generate 28.64% return on investment over 90 days.

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

Aster DM Healthcare  vs.  Spandana Sphoorty Financial

Aster DM Healthcare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Spandana Sphoorty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spandana Sphoorty Financial 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aster DM and Spandana Sphoorty

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

The idea behind Aster DM Healthcare and Spandana Sphoorty Financial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.