Correlation Between Fortis Healthcare and KIOCL

Can any of the company-specific risk be diversified away by investing in both Fortis Healthcare and KIOCL 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 KIOCL 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 KIOCL Limited, you can compare the effects of market volatilities on Fortis Healthcare and KIOCL 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 KIOCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis Healthcare and KIOCL.

Diversification Opportunities for Fortis Healthcare and KIOCL

0.28

Correlation Coefficient

Fortis Healthcare  KIOCL

Modest diversification

The 3 months correlation between Fortis and KIOCL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Healthcare Limited and KIOCL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIOCL 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 KIOCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIOCL Limited has no effect on the direction of Fortis Healthcare i.e., Fortis Healthcare and KIOCL go up and down completely randomly.

Pair Corralation between Fortis Healthcare and KIOCL

Assuming the 90 days trading horizon Fortis Healthcare Limited is expected to generate 0.71 times more return on investment than KIOCL. However, Fortis Healthcare Limited is 1.42 times less risky than KIOCL. It trades about 0.15 of its potential returns per unit of risk. KIOCL Limited is currently generating about -0.06 per unit of risk. If you would invest  65,015  in Fortis Healthcare Limited on September 29, 2024 and sell it today you would earn a total of  3,195  from holding Fortis Healthcare Limited or generate 4.91% return on investment over 90 days.

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

Fortis Healthcare Limited  vs.  KIOCL Limited

Fortis Healthcare

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 7 (%) 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.

KIOCL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, KIOCL is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fortis Healthcare and KIOCL

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

The idea behind Fortis Healthcare Limited and KIOCL 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.