Correlation Between Entero Healthcare and Bajaj Healthcare

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

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

Diversification Opportunities for Entero Healthcare and Bajaj Healthcare

0.11

Correlation Coefficient

Entero Healthcare  Bajaj Healthcare

Average diversification

The 3 months correlation between Entero and Bajaj is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Entero Healthcare Solutions and Bajaj Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Healthcare and Entero 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 Entero Healthcare Solutions are associated (or correlated) with Bajaj Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Healthcare has no effect on the direction of Entero Healthcare i.e., Entero Healthcare and Bajaj Healthcare go up and down completely randomly.

Pair Corralation between Entero Healthcare and Bajaj Healthcare

Assuming the 90 days trading horizon Entero Healthcare is expected to generate 2.19 times less return on investment than Bajaj Healthcare. In addition to that, Entero Healthcare is 1.11 times more volatile than Bajaj Healthcare Limited. It trades about 0.01 of its total potential returns per unit of risk. Bajaj Healthcare Limited is currently generating about 0.03 per unit of volatility. If you would invest  38,518  in Bajaj Healthcare Limited on August 31, 2024 and sell it today you would earn a total of  1,022  from holding Bajaj Healthcare Limited or generate 2.65% return on investment over 90 days.

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

Entero Healthcare Solutions  vs.  Bajaj Healthcare Limited

Entero Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bajaj Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Healthcare Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bajaj Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Entero Healthcare and Bajaj Healthcare

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

The idea behind Entero Healthcare Solutions and Bajaj Healthcare Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.