Correlation Between Zota Health and Nahar Industrial

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

Diversification Opportunities for Zota Health and Nahar Industrial

0.86

Correlation Coefficient

Zota Health  Nahar Industrial

Very poor diversification

The 3 months correlation between Zota and Nahar is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Zota Health Care and Nahar Industrial Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nahar Industrial 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 Nahar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nahar Industrial Ent has no effect on the direction of Zota Health i.e., Zota Health and Nahar Industrial go up and down completely randomly.

Pair Corralation between Zota Health and Nahar Industrial

Assuming the 90 days trading horizon Zota Health Care is expected to generate 1.73 times more return on investment than Nahar Industrial. However, Zota Health is 1.73 times more volatile than Nahar Industrial Enterprises. It trades about 0.45 of its potential returns per unit of risk. Nahar Industrial Enterprises is currently generating about 0.47 per unit of risk. If you would invest  55,520  in Zota Health Care on September 19, 2024 and sell it today you would earn a total of  20,015  from holding Zota Health Care or generate 36.05% return on investment over 90 days.

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

Zota Health Care  vs.  Nahar Industrial Enterprises

Zota Health Care

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 10 (%) 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.

Nahar Industrial Ent

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nahar Industrial Enterprises are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nahar Industrial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zota Health and Nahar Industrial

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

The idea behind Zota Health Care and Nahar Industrial Enterprises 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.