Correlation Between Varun Beverages and Yatharth Hospital

Can any of the company-specific risk be diversified away by investing in both Varun Beverages and Yatharth Hospital 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 Yatharth Hospital 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 Yatharth Hospital Trauma, you can compare the effects of market volatilities on Varun Beverages and Yatharth Hospital 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 Yatharth Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varun Beverages and Yatharth Hospital.

Diversification Opportunities for Varun Beverages and Yatharth Hospital

0.55

Correlation Coefficient

Varun Beverages  Yatharth Hospital

Very weak diversification

The 3 months correlation between Varun and Yatharth is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited and Yatharth Hospital Trauma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatharth Hospital Trauma 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 Yatharth Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yatharth Hospital Trauma has no effect on the direction of Varun Beverages i.e., Varun Beverages and Yatharth Hospital go up and down completely randomly.

Pair Corralation between Varun Beverages and Yatharth Hospital

Assuming the 90 days trading horizon Varun Beverages Limited is expected to generate 8.21 times more return on investment than Yatharth Hospital. However, Varun Beverages is 8.21 times more volatile than Yatharth Hospital Trauma. It trades about 0.06 of its potential returns per unit of risk. Yatharth Hospital Trauma is currently generating about 0.05 per unit of risk. If you would invest  22,817  in Varun Beverages Limited on October 25, 2024 and sell it today you would earn a total of  31,223  from holding Varun Beverages Limited or generate 136.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	74.33%
Values	Daily Returns

Varun Beverages Limited  vs.  Yatharth Hospital Trauma

Varun Beverages

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Yatharth Hospital Trauma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yatharth Hospital Trauma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Varun Beverages and Yatharth Hospital

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

The idea behind Varun Beverages Limited and Yatharth Hospital Trauma 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.