Correlation Between Zydus Wellness and Sakar Healthcare

Can any of the company-specific risk be diversified away by investing in both Zydus Wellness and Sakar Healthcare 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 Zydus Wellness and Sakar Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Zydus Wellness and Sakar Healthcare

0.11

Correlation Coefficient

Zydus Wellness  Sakar Healthcare

Average diversification

The 3 months correlation between Zydus and Sakar is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Zydus Wellness Limited and Sakar Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sakar Healthcare and Zydus Wellness 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 Zydus Wellness Limited are associated (or correlated) with Sakar Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sakar Healthcare has no effect on the direction of Zydus Wellness i.e., Zydus Wellness and Sakar Healthcare go up and down completely randomly.

Pair Corralation between Zydus Wellness and Sakar Healthcare

Assuming the 90 days trading horizon Zydus Wellness Limited is expected to under-perform the Sakar Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Zydus Wellness Limited is 2.05 times less risky than Sakar Healthcare. The stock trades about -0.14 of its potential returns per unit of risk. The Sakar Healthcare Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  29,145  in Sakar Healthcare Limited on September 28, 2024 and sell it today you would earn a total of  650.00  from holding Sakar Healthcare Limited or generate 2.23% return on investment over 90 days.

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

Zydus Wellness Limited  vs.  Sakar Healthcare Limited

Zydus Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zydus Wellness Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Zydus Wellness is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sakar Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sakar Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Zydus Wellness and Sakar Healthcare

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

The idea behind Zydus Wellness Limited and Sakar Healthcare 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..