Correlation Between Mega Lifesciences and Rajthanee Hospital

Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and Rajthanee Hospital 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 Mega Lifesciences and Rajthanee Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mega Lifesciences Public and Rajthanee Hospital Public, you can compare the effects of market volatilities on Mega Lifesciences and Rajthanee Hospital 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 Mega Lifesciences with a short position of Rajthanee Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and Rajthanee Hospital.

Diversification Opportunities for Mega Lifesciences and Rajthanee Hospital

0.78

Correlation Coefficient

Mega Lifesciences  Rajthanee Hospital

Poor diversification

The 3 months correlation between Mega and Rajthanee is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and Rajthanee Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rajthanee Hospital Public and Mega Lifesciences 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 Mega Lifesciences Public are associated (or correlated) with Rajthanee Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rajthanee Hospital Public has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and Rajthanee Hospital go up and down completely randomly.

Pair Corralation between Mega Lifesciences and Rajthanee Hospital

Assuming the 90 days trading horizon Mega Lifesciences Public is expected to under-perform the Rajthanee Hospital. In addition to that, Mega Lifesciences is 1.34 times more volatile than Rajthanee Hospital Public. It trades about -0.05 of its total potential returns per unit of risk. Rajthanee Hospital Public is currently generating about -0.06 per unit of volatility. If you would invest  2,827  in Rajthanee Hospital Public on October 22, 2024 and sell it today you would lose (927.00) from holding Rajthanee Hospital Public or give up 32.79% of portfolio value over 90 days.

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

Mega Lifesciences Public  vs.  Rajthanee Hospital Public

Mega Lifesciences Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mega Lifesciences Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rajthanee Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rajthanee Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mega Lifesciences and Rajthanee Hospital

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

The idea behind Mega Lifesciences Public and Rajthanee Hospital Public 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.