Correlation Between Hi-Tech Pipes and Aster DM

Can any of the company-specific risk be diversified away by investing in both Hi-Tech Pipes and Aster DM 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 Hi-Tech Pipes and Aster DM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hi Tech Pipes Limited and Aster DM Healthcare, you can compare the effects of market volatilities on Hi-Tech Pipes and Aster DM 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 Hi-Tech Pipes with a short position of Aster DM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi-Tech Pipes and Aster DM.

Diversification Opportunities for Hi-Tech Pipes and Aster DM

0.72

Correlation Coefficient

Hi-Tech Pipes  Aster DM

Poor diversification

The 3 months correlation between Hi-Tech and Aster is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Pipes Limited and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare and Hi-Tech Pipes 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 Hi Tech Pipes Limited are associated (or correlated) with Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of Hi-Tech Pipes i.e., Hi-Tech Pipes and Aster DM go up and down completely randomly.

Pair Corralation between Hi-Tech Pipes and Aster DM

Assuming the 90 days trading horizon Hi Tech Pipes Limited is expected to under-perform the Aster DM. In addition to that, Hi-Tech Pipes is 1.73 times more volatile than Aster DM Healthcare. It trades about -0.22 of its total potential returns per unit of risk. Aster DM Healthcare is currently generating about -0.18 per unit of volatility. If you would invest  49,136  in Aster DM Healthcare on December 2, 2024 and sell it today you would lose (8,841) from holding Aster DM Healthcare or give up 17.99% of portfolio value over 90 days.

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

Hi Tech Pipes Limited  vs.  Aster DM Healthcare

Hi Tech Pipes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aster DM Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aster DM Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hi-Tech Pipes and Aster DM

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

The idea behind Hi Tech Pipes Limited and Aster DM Healthcare 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.