Correlation Between Singhe Hospitals and Renuka Agri

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

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

Diversification Opportunities for Singhe Hospitals and Renuka Agri

0.59

Correlation Coefficient

Singhe Hospitals  Renuka Agri

Very weak diversification

The 3 months correlation between Singhe and Renuka is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Singhe Hospitals and Renuka Agri Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renuka Agri Foods 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 Renuka Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renuka Agri Foods has no effect on the direction of Singhe Hospitals i.e., Singhe Hospitals and Renuka Agri go up and down completely randomly.

Pair Corralation between Singhe Hospitals and Renuka Agri

Assuming the 90 days trading horizon Singhe Hospitals is expected to generate 2.45 times less return on investment than Renuka Agri. In addition to that, Singhe Hospitals is 1.24 times more volatile than Renuka Agri Foods. It trades about 0.05 of its total potential returns per unit of risk. Renuka Agri Foods is currently generating about 0.14 per unit of volatility. If you would invest  330.00  in Renuka Agri Foods on October 22, 2024 and sell it today you would earn a total of  50.00  from holding Renuka Agri Foods or generate 15.15% 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.  Renuka Agri Foods

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.

Renuka Agri Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Renuka Agri Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renuka Agri sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singhe Hospitals and Renuka Agri

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

The idea behind Singhe Hospitals and Renuka Agri Foods 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..