Correlation Between Fortis Healthcare and Transport

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

Diversification Opportunities for Fortis Healthcare and Transport

0.46

Correlation Coefficient

Fortis Healthcare  Transport

Very weak diversification

The 3 months correlation between Fortis and Transport is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Healthcare Limited and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of Fortis Healthcare i.e., Fortis Healthcare and Transport go up and down completely randomly.

Pair Corralation between Fortis Healthcare and Transport

Assuming the 90 days trading horizon Fortis Healthcare Limited is expected to generate 0.81 times more return on investment than Transport. However, Fortis Healthcare Limited is 1.24 times less risky than Transport. It trades about 0.18 of its potential returns per unit of risk. Transport of is currently generating about 0.09 per unit of risk. If you would invest  57,610  in Fortis Healthcare Limited on September 12, 2024 and sell it today you would earn a total of  13,770  from holding Fortis Healthcare Limited or generate 23.9% return on investment over 90 days.

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

Fortis Healthcare Limited  vs.  Transport of

Fortis Healthcare

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Fortis Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Transport

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transport of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Transport exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortis Healthcare and Transport

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

The idea behind Fortis Healthcare Limited and Transport of 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.