Correlation Between Agro Tech and Indraprastha Medical

Can any of the company-specific risk be diversified away by investing in both Agro Tech and Indraprastha Medical 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 Agro Tech and Indraprastha Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agro Tech Foods and Indraprastha Medical, you can compare the effects of market volatilities on Agro Tech and Indraprastha Medical 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 Agro Tech with a short position of Indraprastha Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Indraprastha Medical.

Diversification Opportunities for Agro Tech and Indraprastha Medical

0.29

Correlation Coefficient

Agro Tech  Indraprastha Medical

Modest diversification

The 3 months correlation between Agro and Indraprastha is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Indraprastha Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indraprastha Medical and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Indraprastha Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indraprastha Medical has no effect on the direction of Agro Tech i.e., Agro Tech and Indraprastha Medical go up and down completely randomly.

Pair Corralation between Agro Tech and Indraprastha Medical

Assuming the 90 days trading horizon Agro Tech is expected to generate 2.48 times less return on investment than Indraprastha Medical. In addition to that, Agro Tech is 1.07 times more volatile than Indraprastha Medical. It trades about 0.03 of its total potential returns per unit of risk. Indraprastha Medical is currently generating about 0.07 per unit of volatility. If you would invest  43,620  in Indraprastha Medical on October 1, 2024 and sell it today you would earn a total of  5,010  from holding Indraprastha Medical or generate 11.49% return on investment over 90 days.

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

Agro Tech Foods  vs.  Indraprastha Medical

Agro Tech Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Agro Tech is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Indraprastha Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Indraprastha Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agro Tech and Indraprastha Medical

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

The idea behind Agro Tech Foods and Indraprastha Medical 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.