Correlation Between Singhe Hospitals and E M

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

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

Diversification Opportunities for Singhe Hospitals and E M

0.33

Correlation Coefficient

Singhe Hospitals  E M

Weak diversification

The 3 months correlation between Singhe and EMLN0000 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Singhe Hospitals and E M L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E M L and Singhe Hospitals 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 Singhe Hospitals are associated (or correlated) with E M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E M L has no effect on the direction of Singhe Hospitals i.e., Singhe Hospitals and E M go up and down completely randomly.

Pair Corralation between Singhe Hospitals and E M

Assuming the 90 days trading horizon Singhe Hospitals is expected to generate 1.89 times less return on investment than E M. But when comparing it to its historical volatility, Singhe Hospitals is 1.29 times less risky than E M. It trades about 0.13 of its potential returns per unit of risk. E M L is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  360.00  in E M L on October 8, 2024 and sell it today you would earn a total of  60.00  from holding E M L or generate 16.67% return on investment over 90 days.

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

Singhe Hospitals  vs.  E M L

Singhe Hospitals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singhe Hospitals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Singhe Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

E M L

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E M L are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, E M sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singhe Hospitals and E M

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

The idea behind Singhe Hospitals and E M L 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.