Correlation Between Varun Beverages and Global Health

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

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

Diversification Opportunities for Varun Beverages and Global Health

-0.5

Correlation Coefficient

Varun Beverages  Global Health

Very good diversification

The 3 months correlation between Varun and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited and Global Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health Limited and Varun Beverages 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 Varun Beverages Limited are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health Limited has no effect on the direction of Varun Beverages i.e., Varun Beverages and Global Health go up and down completely randomly.

Pair Corralation between Varun Beverages and Global Health

Assuming the 90 days trading horizon Varun Beverages Limited is expected to under-perform the Global Health. In addition to that, Varun Beverages is 1.1 times more volatile than Global Health Limited. It trades about -0.08 of its total potential returns per unit of risk. Global Health Limited is currently generating about 0.1 per unit of volatility. If you would invest  109,650  in Global Health Limited on December 24, 2024 and sell it today you would earn a total of  16,865  from holding Global Health Limited or generate 15.38% return on investment over 90 days.

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

Varun Beverages Limited  vs.  Global Health Limited

Varun Beverages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varun Beverages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Global Health Limited

Risk-Adjusted Performance

OK

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

Pair Trading with Varun Beverages and Global Health

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

The idea behind Varun Beverages Limited and Global Health 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.