Correlation Between GPT Healthcare and Yatharth Hospital

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

By analyzing existing cross correlation between GPT Healthcare and Yatharth Hospital Trauma, you can compare the effects of market volatilities on GPT Healthcare and Yatharth Hospital 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 Yatharth Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT Healthcare and Yatharth Hospital.

Diversification Opportunities for GPT Healthcare and Yatharth Hospital

-0.6

Correlation Coefficient

GPT Healthcare  Yatharth Hospital

Excellent diversification

The 3 months correlation between GPT and Yatharth is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Yatharth Hospital Trauma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatharth Hospital Trauma 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 Yatharth Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yatharth Hospital Trauma has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Yatharth Hospital go up and down completely randomly.

Pair Corralation between GPT Healthcare and Yatharth Hospital

Assuming the 90 days trading horizon GPT Healthcare is expected to generate 16.23 times less return on investment than Yatharth Hospital. But when comparing it to its historical volatility, GPT Healthcare is 1.28 times less risky than Yatharth Hospital. It trades about 0.01 of its potential returns per unit of risk. Yatharth Hospital Trauma is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  51,580  in Yatharth Hospital Trauma on September 3, 2024 and sell it today you would earn a total of  7,885  from holding Yatharth Hospital Trauma or generate 15.29% return on investment over 90 days.

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

GPT Healthcare  vs.  Yatharth Hospital Trauma

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Yatharth Hospital Trauma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yatharth Hospital Trauma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Yatharth Hospital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GPT Healthcare and Yatharth Hospital

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

The idea behind GPT Healthcare and Yatharth Hospital Trauma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.