Correlation Between Persistent Systems and Entero Healthcare

Can any of the company-specific risk be diversified away by investing in both Persistent Systems and Entero Healthcare 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 Persistent Systems and Entero Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Persistent Systems Limited and Entero Healthcare Solutions, you can compare the effects of market volatilities on Persistent Systems and Entero Healthcare 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 Persistent Systems with a short position of Entero Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Persistent Systems and Entero Healthcare.

Diversification Opportunities for Persistent Systems and Entero Healthcare

0.45

Correlation Coefficient

Persistent Systems  Entero Healthcare

Very weak diversification

The 3 months correlation between Persistent and Entero is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Persistent Systems Limited and Entero Healthcare Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entero Healthcare and Persistent Systems 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 Persistent Systems Limited are associated (or correlated) with Entero Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entero Healthcare has no effect on the direction of Persistent Systems i.e., Persistent Systems and Entero Healthcare go up and down completely randomly.

Pair Corralation between Persistent Systems and Entero Healthcare

Assuming the 90 days trading horizon Persistent Systems Limited is expected to generate 0.88 times more return on investment than Entero Healthcare. However, Persistent Systems Limited is 1.13 times less risky than Entero Healthcare. It trades about 0.01 of its potential returns per unit of risk. Entero Healthcare Solutions is currently generating about -0.02 per unit of risk. If you would invest  565,110  in Persistent Systems Limited on October 25, 2024 and sell it today you would earn a total of  3,205  from holding Persistent Systems Limited or generate 0.57% return on investment over 90 days.

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

Persistent Systems Limited  vs.  Entero Healthcare Solutions

Persistent Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Persistent Systems Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Persistent Systems is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Entero Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entero Healthcare Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Entero Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Persistent Systems and Entero Healthcare

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

The idea behind Persistent Systems Limited and Entero Healthcare Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.