Correlation Between Transport and Sakar Healthcare

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

By analyzing existing cross correlation between Transport of and Sakar Healthcare Limited, you can compare the effects of market volatilities on Transport and Sakar Healthcare 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 Transport with a short position of Sakar Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport and Sakar Healthcare.

Diversification Opportunities for Transport and Sakar Healthcare

0.17

Correlation Coefficient

Transport  Sakar Healthcare

Average diversification

The 3 months correlation between Transport and Sakar is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Transport of and Sakar Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sakar Healthcare and Transport 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 Transport of are associated (or correlated) with Sakar Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sakar Healthcare has no effect on the direction of Transport i.e., Transport and Sakar Healthcare go up and down completely randomly.

Pair Corralation between Transport and Sakar Healthcare

Assuming the 90 days trading horizon Transport of is expected to generate 1.19 times more return on investment than Sakar Healthcare. However, Transport is 1.19 times more volatile than Sakar Healthcare Limited. It trades about 0.05 of its potential returns per unit of risk. Sakar Healthcare Limited is currently generating about -0.03 per unit of risk. If you would invest  106,710  in Transport of on September 29, 2024 and sell it today you would earn a total of  6,270  from holding Transport of or generate 5.88% return on investment over 90 days.

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

Transport of  vs.  Sakar Healthcare Limited

Transport

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transport of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Transport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sakar Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sakar Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Sakar Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Transport and Sakar Healthcare

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

The idea behind Transport of and Sakar Healthcare Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.