Correlation Between Medplus Health and Indian Oil

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

By analyzing existing cross correlation between Medplus Health Services and Indian Oil, you can compare the effects of market volatilities on Medplus Health and Indian Oil 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 Medplus Health with a short position of Indian Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medplus Health and Indian Oil.

Diversification Opportunities for Medplus Health and Indian Oil

-0.51

Correlation Coefficient

Medplus Health  Indian Oil

Excellent diversification

The 3 months correlation between Medplus and Indian is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Medplus Health Services and Indian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Oil and Medplus 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 Medplus Health Services are associated (or correlated) with Indian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Oil has no effect on the direction of Medplus Health i.e., Medplus Health and Indian Oil go up and down completely randomly.

Pair Corralation between Medplus Health and Indian Oil

Assuming the 90 days trading horizon Medplus Health Services is expected to generate 1.02 times more return on investment than Indian Oil. However, Medplus Health is 1.02 times more volatile than Indian Oil. It trades about 0.22 of its potential returns per unit of risk. Indian Oil is currently generating about -0.15 per unit of risk. If you would invest  68,000  in Medplus Health Services on September 17, 2024 and sell it today you would earn a total of  17,500  from holding Medplus Health Services or generate 25.74% return on investment over 90 days.

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

Medplus Health Services  vs.  Indian Oil

Medplus Health Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medplus Health Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Medplus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indian Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Medplus Health and Indian Oil

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

The idea behind Medplus Health Services and Indian Oil 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.