Correlation Between Dalmia Bharat and Aster DM

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

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

Diversification Opportunities for Dalmia Bharat and Aster DM

0.0

Correlation Coefficient

Dalmia Bharat  Aster DM

Pay attention - limited upside

The 3 months correlation between Dalmia and Aster is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dalmia Bharat 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 Dalmia Bharat 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 Dalmia Bharat 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 Dalmia Bharat i.e., Dalmia Bharat and Aster DM go up and down completely randomly.

Pair Corralation between Dalmia Bharat and Aster DM

Assuming the 90 days trading horizon Dalmia Bharat Limited is expected to under-perform the Aster DM. But the stock apears to be less risky and, when comparing its historical volatility, Dalmia Bharat Limited is 1.3 times less risky than Aster DM. The stock trades about -0.03 of its potential returns per unit of risk. The Aster DM Healthcare is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  41,835  in Aster DM Healthcare on October 8, 2024 and sell it today you would earn a total of  10,300  from holding Aster DM Healthcare or generate 24.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dalmia Bharat Limited  vs.  Aster DM Healthcare

Dalmia Bharat Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalmia Bharat Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Dalmia Bharat is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Aster DM Healthcare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalmia Bharat and Aster DM

The main advantage of trading using opposite Dalmia Bharat and Aster DM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalmia Bharat 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 Dalmia Bharat 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.