Correlation Between Zota Health and Indraprastha Medical

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

Diversification Opportunities for Zota Health and Indraprastha Medical

0.54

Correlation Coefficient

Zota Health  Indraprastha Medical

Very weak diversification

The 3 months correlation between Zota and Indraprastha is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zota Health Care and Indraprastha Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indraprastha Medical 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 Indraprastha Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indraprastha Medical has no effect on the direction of Zota Health i.e., Zota Health and Indraprastha Medical go up and down completely randomly.

Pair Corralation between Zota Health and Indraprastha Medical

Assuming the 90 days trading horizon Zota Health is expected to generate 2.14 times less return on investment than Indraprastha Medical. But when comparing it to its historical volatility, Zota Health Care is 1.43 times less risky than Indraprastha Medical. It trades about 0.02 of its potential returns per unit of risk. Indraprastha Medical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  46,890  in Indraprastha Medical on September 14, 2024 and sell it today you would earn a total of  1,430  from holding Indraprastha Medical or generate 3.05% return on investment over 90 days.

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

Zota Health Care  vs.  Indraprastha Medical

Zota Health Care

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zota Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Indraprastha Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Indraprastha Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zota Health and Indraprastha Medical

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

The idea behind Zota Health Care and Indraprastha Medical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.