Correlation Between Rama Steel and Apollo Hospitals

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

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

Diversification Opportunities for Rama Steel and Apollo Hospitals

0.83

Correlation Coefficient

Rama Steel  Apollo Hospitals

Very poor diversification

The 3 months correlation between Rama and Apollo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rama Steel Tubes 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 Rama Steel 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 Rama Steel Tubes 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 Rama Steel i.e., Rama Steel and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Rama Steel and Apollo Hospitals

Assuming the 90 days trading horizon Rama Steel Tubes is expected to under-perform the Apollo Hospitals. In addition to that, Rama Steel is 1.72 times more volatile than Apollo Hospitals Enterprise. It trades about -0.13 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about -0.12 per unit of volatility. If you would invest  730,392  in Apollo Hospitals Enterprise on December 28, 2024 and sell it today you would lose (81,187) from holding Apollo Hospitals Enterprise or give up 11.12% of portfolio value over 90 days.

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

Rama Steel Tubes  vs.  Apollo Hospitals Enterprise

Rama Steel Tubes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rama Steel Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Apollo Hospitals Ent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Hospitals Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Rama Steel and Apollo Hospitals

The main advantage of trading using opposite Rama Steel and Apollo Hospitals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rama Steel 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 Rama Steel Tubes 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.