Correlation Between Fortis Healthcare and Hardwyn India

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

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

Diversification Opportunities for Fortis Healthcare and Hardwyn India

-0.76

Correlation Coefficient

Fortis Healthcare  Hardwyn India

Pay attention - limited upside

The 3 months correlation between Fortis and Hardwyn is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Healthcare Limited and Hardwyn India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardwyn India Limited and Fortis 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 Fortis Healthcare Limited are associated (or correlated) with Hardwyn India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardwyn India Limited has no effect on the direction of Fortis Healthcare i.e., Fortis Healthcare and Hardwyn India go up and down completely randomly.

Pair Corralation between Fortis Healthcare and Hardwyn India

Assuming the 90 days trading horizon Fortis Healthcare is expected to generate 8.92 times less return on investment than Hardwyn India. But when comparing it to its historical volatility, Fortis Healthcare Limited is 24.26 times less risky than Hardwyn India. It trades about 0.11 of its potential returns per unit of risk. Hardwyn India Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,197  in Hardwyn India Limited on September 28, 2024 and sell it today you would lose (232.00) from holding Hardwyn India Limited or give up 7.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Fortis Healthcare Limited  vs.  Hardwyn India Limited

Fortis Healthcare

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fortis Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hardwyn India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardwyn India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fortis Healthcare and Hardwyn India

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

The idea behind Fortis Healthcare Limited and Hardwyn India 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.