Correlation Between Indraprastha Medical and Golden Tobacco

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

By analyzing existing cross correlation between Indraprastha Medical and Golden Tobacco Limited, you can compare the effects of market volatilities on Indraprastha Medical and Golden Tobacco 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 Indraprastha Medical with a short position of Golden Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indraprastha Medical and Golden Tobacco.

Diversification Opportunities for Indraprastha Medical and Golden Tobacco

0.46

Correlation Coefficient

Indraprastha Medical  Golden Tobacco

Very weak diversification

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

Pair Corralation between Indraprastha Medical and Golden Tobacco

Assuming the 90 days trading horizon Indraprastha Medical is expected to generate 1.25 times more return on investment than Golden Tobacco. However, Indraprastha Medical is 1.25 times more volatile than Golden Tobacco Limited. It trades about 0.03 of its potential returns per unit of risk. Golden Tobacco Limited is currently generating about 0.01 per unit of risk. If you would invest  47,900  in Indraprastha Medical on September 13, 2024 and sell it today you would earn a total of  1,520  from holding Indraprastha Medical or generate 3.17% return on investment over 90 days.

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

Indraprastha Medical  vs.  Golden Tobacco Limited

Indraprastha Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Indraprastha Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Golden Tobacco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Tobacco Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Indraprastha Medical and Golden Tobacco

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

The idea behind Indraprastha Medical and Golden Tobacco Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.