Correlation Between Global Health and Laxmi Organic

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

By analyzing existing cross correlation between Global Health Limited and Laxmi Organic Industries, you can compare the effects of market volatilities on Global Health and Laxmi Organic 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 Global Health with a short position of Laxmi Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Laxmi Organic.

Diversification Opportunities for Global Health and Laxmi Organic

-0.28

Correlation Coefficient

Global Health  Laxmi Organic

Very good diversification

The 3 months correlation between Global and Laxmi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global Health Limited and Laxmi Organic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laxmi Organic Industries and Global Health 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 Global Health Limited are associated (or correlated) with Laxmi Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laxmi Organic Industries has no effect on the direction of Global Health i.e., Global Health and Laxmi Organic go up and down completely randomly.

Pair Corralation between Global Health and Laxmi Organic

Assuming the 90 days trading horizon Global Health Limited is expected to generate 0.71 times more return on investment than Laxmi Organic. However, Global Health Limited is 1.4 times less risky than Laxmi Organic. It trades about -0.35 of its potential returns per unit of risk. Laxmi Organic Industries is currently generating about -0.38 per unit of risk. If you would invest  118,005  in Global Health Limited on October 8, 2024 and sell it today you would lose (11,005) from holding Global Health Limited or give up 9.33% of portfolio value over 90 days.

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

Global Health Limited  vs.  Laxmi Organic Industries

Global Health Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Global Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Laxmi Organic Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laxmi Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Global Health and Laxmi Organic

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

The idea behind Global Health Limited and Laxmi Organic Industries 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.