Correlation Between Medplus Health and Patanjali Foods

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

Diversification Opportunities for Medplus Health and Patanjali Foods

0.53

Correlation Coefficient

Medplus Health  Patanjali Foods

Very weak diversification

The 3 months correlation between Medplus and Patanjali is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Medplus Health Services and Patanjali Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patanjali Foods 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 Patanjali Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patanjali Foods has no effect on the direction of Medplus Health i.e., Medplus Health and Patanjali Foods go up and down completely randomly.

Pair Corralation between Medplus Health and Patanjali Foods

Assuming the 90 days trading horizon Medplus Health is expected to generate 1.24 times less return on investment than Patanjali Foods. But when comparing it to its historical volatility, Medplus Health Services is 1.13 times less risky than Patanjali Foods. It trades about 0.05 of its potential returns per unit of risk. Patanjali Foods Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  117,406  in Patanjali Foods Limited on September 20, 2024 and sell it today you would earn a total of  61,874  from holding Patanjali Foods Limited or generate 52.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Medplus Health Services  vs.  Patanjali Foods Limited

Medplus Health Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medplus Health Services are ranked lower than 18 (%) 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.

Patanjali Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patanjali Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Patanjali Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Medplus Health and Patanjali Foods

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

The idea behind Medplus Health Services and Patanjali Foods 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.