Correlation Between Zota Health and Apollo Hospitals

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

By analyzing existing cross correlation between Zota Health Care and Apollo Hospitals Enterprise, you can compare the effects of market volatilities on Zota Health and Apollo Hospitals 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 Zota Health with a short position of Apollo Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zota Health and Apollo Hospitals.

Diversification Opportunities for Zota Health and Apollo Hospitals

0.65

Correlation Coefficient

Zota Health  Apollo Hospitals

Poor diversification

The 3 months correlation between Zota and Apollo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zota Health Care and Apollo Hospitals Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Hospitals Ent and Zota Health 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 Zota Health Care are associated (or correlated) with Apollo Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Hospitals Ent has no effect on the direction of Zota Health i.e., Zota Health and Apollo Hospitals go up and down completely randomly.

Pair Corralation between Zota Health and Apollo Hospitals

Assuming the 90 days trading horizon Zota Health Care is expected to generate 1.74 times more return on investment than Apollo Hospitals. However, Zota Health is 1.74 times more volatile than Apollo Hospitals Enterprise. It trades about 0.1 of its potential returns per unit of risk. Apollo Hospitals Enterprise is currently generating about 0.08 per unit of risk. If you would invest  47,429  in Zota Health Care on October 5, 2024 and sell it today you would earn a total of  32,816  from holding Zota Health Care or generate 69.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Zota Health Care  vs.  Apollo Hospitals Enterprise

Zota Health Care

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zota Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apollo Hospitals Ent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Hospitals Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zota Health and Apollo Hospitals

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

The idea behind Zota Health Care and Apollo Hospitals Enterprise 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.