Correlation Between Singhe Hospitals and Janashakthi Insurance

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

By analyzing existing cross correlation between Singhe Hospitals and Janashakthi Insurance, you can compare the effects of market volatilities on Singhe Hospitals and Janashakthi Insurance 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 Janashakthi Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singhe Hospitals and Janashakthi Insurance.

Diversification Opportunities for Singhe Hospitals and Janashakthi Insurance

0.58

Correlation Coefficient

Singhe Hospitals  Janashakthi Insurance

Very weak diversification

The 3 months correlation between Singhe and Janashakthi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Singhe Hospitals and Janashakthi Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janashakthi Insurance 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 Janashakthi Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janashakthi Insurance has no effect on the direction of Singhe Hospitals i.e., Singhe Hospitals and Janashakthi Insurance go up and down completely randomly.

Pair Corralation between Singhe Hospitals and Janashakthi Insurance

Assuming the 90 days trading horizon Singhe Hospitals is expected to generate 4.57 times less return on investment than Janashakthi Insurance. In addition to that, Singhe Hospitals is 1.47 times more volatile than Janashakthi Insurance. It trades about 0.04 of its total potential returns per unit of risk. Janashakthi Insurance is currently generating about 0.24 per unit of volatility. If you would invest  5,520  in Janashakthi Insurance on December 28, 2024 and sell it today you would earn a total of  1,860  from holding Janashakthi Insurance or generate 33.7% return on investment over 90 days.

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

Singhe Hospitals  vs.  Janashakthi Insurance

Singhe Hospitals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singhe Hospitals are ranked lower than 2 (%) 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 April 2025.

Janashakthi Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janashakthi Insurance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Janashakthi Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singhe Hospitals and Janashakthi Insurance

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

The idea behind Singhe Hospitals and Janashakthi Insurance 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.