Correlation Between GPT Healthcare and Max Healthcare

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

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

Diversification Opportunities for GPT Healthcare and Max Healthcare

0.17

Correlation Coefficient

GPT Healthcare  Max Healthcare

Average diversification

The 3 months correlation between GPT and Max is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Max Healthcare Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Healthcare Institute and GPT 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 GPT Healthcare are associated (or correlated) with Max Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Healthcare Institute has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Max Healthcare go up and down completely randomly.

Pair Corralation between GPT Healthcare and Max Healthcare

Assuming the 90 days trading horizon GPT Healthcare is expected to under-perform the Max Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, GPT Healthcare is 1.26 times less risky than Max Healthcare. The stock trades about -0.01 of its potential returns per unit of risk. The Max Healthcare Institute is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  90,800  in Max Healthcare Institute on September 13, 2024 and sell it today you would earn a total of  22,420  from holding Max Healthcare Institute or generate 24.69% return on investment over 90 days.

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

GPT Healthcare  vs.  Max Healthcare Institute

GPT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Max Healthcare Institute

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Max Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GPT Healthcare and Max Healthcare

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

The idea behind GPT Healthcare and Max Healthcare Institute 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.