Correlation Between Power Finance and Apollo Hospitals

Can any of the company-specific risk be diversified away by investing in both Power Finance and Apollo Hospitals 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 Power Finance and Apollo Hospitals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Finance and Apollo Hospitals Enterprise, you can compare the effects of market volatilities on Power Finance and Apollo Hospitals 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 Power Finance with a short position of Apollo Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and Apollo Hospitals.

Diversification Opportunities for Power Finance and Apollo Hospitals

-0.11

Correlation Coefficient

Power Finance  Apollo Hospitals

Good diversification

The 3 months correlation between Power and Apollo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and Apollo Hospitals Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Hospitals Ent and Power Finance 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 Power Finance are associated (or correlated) with Apollo Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Hospitals Ent has no effect on the direction of Power Finance i.e., Power Finance and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Power Finance and Apollo Hospitals

Assuming the 90 days trading horizon Power Finance is expected to under-perform the Apollo Hospitals. In addition to that, Power Finance is 1.66 times more volatile than Apollo Hospitals Enterprise. It trades about -0.05 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about 0.04 per unit of volatility. If you would invest  693,090  in Apollo Hospitals Enterprise on September 4, 2024 and sell it today you would earn a total of  19,565  from holding Apollo Hospitals Enterprise or generate 2.82% return on investment over 90 days.

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

Power Finance  vs.  Apollo Hospitals Enterprise

Power Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Apollo Hospitals Ent

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Apollo Hospitals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Power Finance and Apollo Hospitals

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

The idea behind Power Finance and Apollo Hospitals Enterprise 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.