Correlation Between Hemisphere Properties and Apollo Hospitals

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

By analyzing existing cross correlation between Hemisphere Properties India and Apollo Hospitals Enterprise, you can compare the effects of market volatilities on Hemisphere Properties and Apollo Hospitals 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 Hemisphere Properties with a short position of Apollo Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Properties and Apollo Hospitals.

Diversification Opportunities for Hemisphere Properties and Apollo Hospitals

0.15

Correlation Coefficient

Hemisphere Properties  Apollo Hospitals

Average diversification

The 3 months correlation between Hemisphere and Apollo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Properties India and Apollo Hospitals Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Hospitals Ent and Hemisphere Properties 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 Hemisphere Properties India are associated (or correlated) with Apollo Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Hospitals Ent has no effect on the direction of Hemisphere Properties i.e., Hemisphere Properties and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Hemisphere Properties and Apollo Hospitals

Assuming the 90 days trading horizon Hemisphere Properties India is expected to under-perform the Apollo Hospitals. In addition to that, Hemisphere Properties is 3.2 times more volatile than Apollo Hospitals Enterprise. It trades about -0.03 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about 0.17 per unit of volatility. If you would invest  723,235  in Apollo Hospitals Enterprise on October 5, 2024 and sell it today you would earn a total of  18,930  from holding Apollo Hospitals Enterprise or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hemisphere Properties India  vs.  Apollo Hospitals Enterprise

Hemisphere Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Apollo Hospitals Ent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hemisphere Properties and Apollo Hospitals

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

The idea behind Hemisphere Properties India and Apollo Hospitals Enterprise 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.