Correlation Between Global Health and Niraj Ispat

Can any of the company-specific risk be diversified away by investing in both Global Health and Niraj Ispat 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 Niraj Ispat 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 Niraj Ispat Industries, you can compare the effects of market volatilities on Global Health and Niraj Ispat 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 Niraj Ispat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Niraj Ispat.

Diversification Opportunities for Global Health and Niraj Ispat

0.42

Correlation Coefficient

Global Health  Niraj Ispat

Very weak diversification

The 3 months correlation between Global and Niraj is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global Health Limited and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of Global Health i.e., Global Health and Niraj Ispat go up and down completely randomly.

Pair Corralation between Global Health and Niraj Ispat

Assuming the 90 days trading horizon Global Health Limited is expected to under-perform the Niraj Ispat. But the stock apears to be less risky and, when comparing its historical volatility, Global Health Limited is 1.6 times less risky than Niraj Ispat. The stock trades about -0.18 of its potential returns per unit of risk. The Niraj Ispat Industries is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  21,442  in Niraj Ispat Industries on October 4, 2024 and sell it today you would earn a total of  3,076  from holding Niraj Ispat Industries or generate 14.35% return on investment over 90 days.

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

Global Health Limited  vs.  Niraj Ispat Industries

Global Health Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health Limited are ranked lower than 8 (%) 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.

Niraj Ispat Industries

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Health and Niraj Ispat

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

The idea behind Global Health Limited and Niraj Ispat 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.