Correlation Between Prestige Consumer and MEDIPAL HOLDINGS

Can any of the company-specific risk be diversified away by investing in both Prestige Consumer and MEDIPAL HOLDINGS 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 Prestige Consumer and MEDIPAL HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prestige Consumer Healthcare and MEDIPAL HOLDINGS P, you can compare the effects of market volatilities on Prestige Consumer and MEDIPAL HOLDINGS 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 Prestige Consumer with a short position of MEDIPAL HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Consumer and MEDIPAL HOLDINGS.

Diversification Opportunities for Prestige Consumer and MEDIPAL HOLDINGS

-0.04

Correlation Coefficient

Prestige Consumer  MEDIPAL HOLDINGS

Good diversification

The 3 months correlation between Prestige and MEDIPAL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Consumer Healthcare and MEDIPAL HOLDINGS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPAL HOLDINGS P and Prestige Consumer 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 Prestige Consumer Healthcare are associated (or correlated) with MEDIPAL HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPAL HOLDINGS P has no effect on the direction of Prestige Consumer i.e., Prestige Consumer and MEDIPAL HOLDINGS go up and down completely randomly.

Pair Corralation between Prestige Consumer and MEDIPAL HOLDINGS

Assuming the 90 days horizon Prestige Consumer Healthcare is expected to generate 1.2 times more return on investment than MEDIPAL HOLDINGS. However, Prestige Consumer is 1.2 times more volatile than MEDIPAL HOLDINGS P. It trades about 0.16 of its potential returns per unit of risk. MEDIPAL HOLDINGS P is currently generating about -0.1 per unit of risk. If you would invest  6,100  in Prestige Consumer Healthcare on October 10, 2024 and sell it today you would earn a total of  1,000.00  from holding Prestige Consumer Healthcare or generate 16.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Prestige Consumer Healthcare  vs.  MEDIPAL HOLDINGS P

Prestige Consumer

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Consumer Healthcare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prestige Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDIPAL HOLDINGS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Prestige Consumer and MEDIPAL HOLDINGS

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

The idea behind Prestige Consumer Healthcare and MEDIPAL HOLDINGS P 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.