Correlation Between Bajaj Healthcare and Aster DM

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

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

Diversification Opportunities for Bajaj Healthcare and Aster DM

0.66

Correlation Coefficient

Bajaj Healthcare  Aster DM

Poor diversification

The 3 months correlation between Bajaj and Aster is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare Limited and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare and Bajaj Healthcare 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 Bajaj Healthcare Limited are associated (or correlated) with Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of Bajaj Healthcare i.e., Bajaj Healthcare and Aster DM go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and Aster DM

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to generate 1.86 times more return on investment than Aster DM. However, Bajaj Healthcare is 1.86 times more volatile than Aster DM Healthcare. It trades about 0.14 of its potential returns per unit of risk. Aster DM Healthcare is currently generating about 0.16 per unit of risk. If you would invest  33,262  in Bajaj Healthcare Limited on September 25, 2024 and sell it today you would earn a total of  23,988  from holding Bajaj Healthcare Limited or generate 72.12% return on investment over 90 days.

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

Bajaj Healthcare Limited  vs.  Aster DM Healthcare

Bajaj Healthcare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Healthcare Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Bajaj Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aster DM Healthcare

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bajaj Healthcare and Aster DM

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

The idea behind Bajaj Healthcare Limited and Aster DM Healthcare 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.