Correlation Between Rico Auto and Apollo Hospitals

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

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

Diversification Opportunities for Rico Auto and Apollo Hospitals

0.15

Correlation Coefficient

Rico Auto  Apollo Hospitals

Average diversification

The 3 months correlation between Rico and Apollo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries 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 Rico Auto 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 Rico Auto Industries 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 Rico Auto i.e., Rico Auto and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Rico Auto and Apollo Hospitals

Assuming the 90 days trading horizon Rico Auto Industries is expected to under-perform the Apollo Hospitals. In addition to that, Rico Auto is 2.16 times more volatile than Apollo Hospitals Enterprise. It trades about -0.08 of its total potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about -0.02 per unit of volatility. If you would invest  712,200  in Apollo Hospitals Enterprise on October 24, 2024 and sell it today you would lose (20,285) from holding Apollo Hospitals Enterprise or give up 2.85% of portfolio value over 90 days.

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

Rico Auto Industries  vs.  Apollo Hospitals Enterprise

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rico Auto is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Apollo Hospitals Ent

Risk-Adjusted Performance

0 of 100

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 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 Rico Auto and Apollo Hospitals

The main advantage of trading using opposite Rico Auto and Apollo Hospitals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rico Auto 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 Rico Auto Industries 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.