Correlation Between Bajaj Healthcare and Impex Ferro

Can any of the company-specific risk be diversified away by investing in both Bajaj Healthcare and Impex Ferro 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 Impex Ferro 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 Impex Ferro Tech, you can compare the effects of market volatilities on Bajaj Healthcare and Impex Ferro 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 Impex Ferro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Healthcare and Impex Ferro.

Diversification Opportunities for Bajaj Healthcare and Impex Ferro

-0.31

Correlation Coefficient

Bajaj Healthcare  Impex Ferro

Very good diversification

The 3 months correlation between Bajaj and Impex is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare Limited and Impex Ferro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impex Ferro Tech 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 Impex Ferro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impex Ferro Tech has no effect on the direction of Bajaj Healthcare i.e., Bajaj Healthcare and Impex Ferro go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and Impex Ferro

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to generate 1.13 times more return on investment than Impex Ferro. However, Bajaj Healthcare is 1.13 times more volatile than Impex Ferro Tech. It trades about 0.05 of its potential returns per unit of risk. Impex Ferro Tech is currently generating about 0.0 per unit of risk. If you would invest  41,580  in Bajaj Healthcare Limited on October 27, 2024 and sell it today you would earn a total of  14,285  from holding Bajaj Healthcare Limited or generate 34.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.67%
Values	Daily Returns

Bajaj Healthcare Limited  vs.  Impex Ferro Tech

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 conflicting basic indicators, Bajaj Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Impex Ferro Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Impex Ferro Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Impex Ferro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bajaj Healthcare and Impex Ferro

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

The idea behind Bajaj Healthcare Limited and Impex Ferro Tech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.