Correlation Between Bharat Road and Apollo Hospitals

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

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

Diversification Opportunities for Bharat Road and Apollo Hospitals

0.59

Correlation Coefficient

Bharat Road  Apollo Hospitals

Very weak diversification

The 3 months correlation between Bharat and Apollo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bharat Road Network 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 Bharat Road 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 Bharat Road Network 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 Bharat Road i.e., Bharat Road and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Bharat Road and Apollo Hospitals

Assuming the 90 days trading horizon Bharat Road is expected to generate 1.18 times less return on investment than Apollo Hospitals. In addition to that, Bharat Road is 2.4 times more volatile than Apollo Hospitals Enterprise. It trades about 0.03 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about 0.08 per unit of volatility. If you would invest  445,259  in Apollo Hospitals Enterprise on September 20, 2024 and sell it today you would earn a total of  284,496  from holding Apollo Hospitals Enterprise or generate 63.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Bharat Road Network  vs.  Apollo Hospitals Enterprise

Bharat Road Network

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bharat Road Network are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bharat Road is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Apollo Hospitals Ent

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Apollo Hospitals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bharat Road and Apollo Hospitals

The main advantage of trading using opposite Bharat Road and Apollo Hospitals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bharat Road 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 Bharat Road Network 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.