Correlation Between Bharti Airtel and Apollo Hospitals

Can any of the company-specific risk be diversified away by investing in both Bharti Airtel and Apollo Hospitals 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 Bharti Airtel and Apollo Hospitals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bharti Airtel Limited and Apollo Hospitals Enterprise, you can compare the effects of market volatilities on Bharti Airtel and Apollo Hospitals 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 Bharti Airtel with a short position of Apollo Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharti Airtel and Apollo Hospitals.

Diversification Opportunities for Bharti Airtel and Apollo Hospitals

-0.52

Correlation Coefficient

Bharti Airtel  Apollo Hospitals

Excellent diversification

The 3 months correlation between Bharti and Apollo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel Limited and Apollo Hospitals Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Hospitals Ent and Bharti Airtel 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 Bharti Airtel Limited are associated (or correlated) with Apollo Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Hospitals Ent has no effect on the direction of Bharti Airtel i.e., Bharti Airtel and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Bharti Airtel and Apollo Hospitals

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to generate 1.07 times more return on investment than Apollo Hospitals. However, Bharti Airtel is 1.07 times more volatile than Apollo Hospitals Enterprise. It trades about -0.04 of its potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about -0.16 per unit of risk. If you would invest  164,360  in Bharti Airtel Limited on December 2, 2024 and sell it today you would lose (7,340) from holding Bharti Airtel Limited or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Bharti Airtel Limited  vs.  Apollo Hospitals Enterprise

Bharti Airtel Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bharti Airtel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Apollo Hospitals Ent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Hospitals Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Bharti Airtel and Apollo Hospitals

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

The idea behind Bharti Airtel Limited and Apollo Hospitals Enterprise 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .